The welfare gains of trade integration in the European monetary union

Stéphane Auray, Aurélien Eyquem and Jean-Christophe Poutineau ()
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Jean-Christophe Poutineau: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper evaluates the welfare gains arising from 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 production. The model is estimated and not rejected by the data. Two main results emerge: (i) an increase in vertical trade (occuring at the early stage of the production process) implies welfare gains whereas (ii) an increase in horizontal trade (occuring at the late stage of the production process) implies welfare losses.

Keywords: Monetary union; trade integration; inflation differentials; welfare analysis (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

Published in Macroeconomic Dynamics, 2010, 14 (5), pp.645-676. ⟨10.1017/S1365100509090440⟩

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Related works:
Journal Article: THE WELFARE GAINS OF TRADE INTEGRATION IN THE EUROPEAN MONETARY UNION (2010)
Working Paper: The Welfare Gains of Trade Integration in the European Monetary Union (2009)
Working Paper: The Welfare Gains of Trade Integration in the European Monetary Union (2009)
Working Paper: The Welfare Gains of Trade Integration in the European Monetary Union (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00493915

DOI: 10.1017/S1365100509090440

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