Intra Industry Trade and shock asymmetry in a monetary union - A study of trade evolution in the Euro Zone

Bachelor Thesis from the year 2012 in the subject Economics - Monetary theory and policy, grade: 1.0, University of Mannheim, language: English, abstract: Evolution of Intra-industry trade and OCA theory are closely linked via the correlation of Business Cycles and Kenen’s diversification criteria. Adapting a methodology from Fontagné and Freudenberg, I decompose trade patterns within the Euro zone for the period 1999-2011. The methodology allows for disentangling vertically and horizontally differentiated Intra-industry trade accounting for the different determinants of those two types of trade.An increased specialization of countries in certain product categories cannot be confirmed,neither can an increase in Business cycle correlation as shares of the different trade types remain stable during the whole period of analysis.