How Did European Institutional Integration and Intra-European Trade Interact?

EMU has spurred an interest on the effects of monetary unions on regional economic integration. This paper investigates the link between intra-European trade growth and the institutional process of regional integration, of which monetary integration was one step. Special attention is paid to the successive EU enlargements. Some causality tests are used to assess the direction and magnitude of impacts. The evidence provided is consistent with the idea that the interaction between regional institutional and trade integration before monetary union matters. Such interaction runs in both directions, although the link from institutional to trade integration dominates. Many open questions remain.