Welfare Gains from the Variety Growth

d'Artis Kancs and Damiaan Persyn

No 2019-01, JRC Working Papers in Economics and Finance from Joint Research Centre, European Commission

Abstract: We estimate the variety gains of trade in Estonia, Latvia and Lithuania following the fall of the iron curtain more than a quarter of a century ago. We apply the methodology of Feenstra (1994); Broda and Weinstein (2006); Ardelean and Lugovskyy (2010) and Soderbery (2015) to domestic and international trade data for the period 1988-1997. Although, there was a decline in the number of local varieties during this period, an increase in the number of import varieties from the EU more than outweighed this decline. The increasing variety of imported goods from EU countries substantially lowered the cost of living, resulting in welfare gains to consumers that range from 0.73% in Latvia to 1.28% of GDP per year in Estonia.

Keywords: variety growth; welfare gains; trade integration; iron curtain (search for similar items in EconPapers)
JEL-codes: C68 F12 F14 F17 R12 R23 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2019-04
New Economics Papers: this item is included in nep-cis, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published by Publications office of the European Union, 2019

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Working Paper: Welfare Gains from the Variety Growth (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:jrs:wpaper:201901

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