We introduce transport cost of trade in products into the classical Zodrow and Mieszkowski (1986) model of capital tax …

itself) to a sizable and statistically significant increase in trade between the member countries of EMU. In this paper, we … put the trade effect of the euro in historical perspective. We argue that the creation of the EMU was a continuation (or … strong evidence of a gradual increase in trade intensity between European countries. Once we control for this trend in trade …