The Welfare Gains of Trade Integration in the European Monetary Union

Stéphane Auray, Aurélien Eyquem and Poutineau, Jean-Christophe
Additional contact information
Poutineau, Jean-Christophe: CREM, UMR 6211, Université de Rennes 1 and Ecole Normale Supérieure de Cachan, France

Cahiers de recherche from Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke

Abstract: This paper evaluates the welfare gains arising from a deeper trade integration in the European Monetary Union. To do this, the European Monetary Union is represented in a realistic way by an intertemporal general equilibrium model with incomplete financial markets, sticky prices and home bias in both private consumption and production. The model is estimated and not rejected by the data. Two main results emerge : (i) an increase in vertical (intermediate goods) trade implies welfare gains while (ii) an increase in horizontal (final goods) trade implies welfare losses.

Keywords: trade integration; inflation differentials; welfare analysis; optimal currency areas (search for similar items in EconPapers)
JEL-codes: F32 F41 F47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec and nep-opm
Date: 2008
View list of references

Downloads: (external link)
http://pages.usherbrooke.ca/gredi/wpapers/GREDI-0810.pdf First version, 2008 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:shr:wpaper:08-10

Access Statistics for this paper

More papers in Cahiers de recherche from Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke
Contact information at EDIRC.
Series data maintained by Luc Savard ().