Gains from financial integration in the European union: evidence for new and old members

Yuliya Demyanyk () and Vadym Volosovych ()

No 2007-01, Supervisory Policy Analysis Working Papers from Federal Reserve Bank of St. Louis

Abstract: We estimate potential welfare gains from financial integration and corresponding better insurance against country-specific shocks to output (risk sharing) for the twenty-five European Union countries. Using theoretical utility-based measures we express the gains from risk sharing as the utility equivalent of a permanent increase in consumption. We report positive potential welfare gains for all the EU countries if they move toward full risk sharing. Ten country-members who joined the Union in 2004 have more volatile or counter-cyclical consumption and output and would obtain much higher potential gains than the longer-standing fifteen members.

Keywords: International finance; European Union countries (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec
Date: 2007
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Journal Article: Gains from financial integration in the European Union: Evidence for new and old members (2008)
Working Paper: Gains from Financial Integration in the European Union: Evidence for New and Old Members (2007)
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