Quantifying the Economic Effects of the Single Market in a Structural Macromodel

Jan in 't Veld

No 94, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: This paper examines the macro-economic benefits of the Single Market in goods and services by simulating a counterfactual scenario in which tariffs and non-tariff barriers are reintroduced. Model simulations show how the reintroduction of trade barriers in such a counterfactual would lead to significantly lower trade flows between the Member States. Lower trade openness also means reduced market size and less competition. Using empirical evidence on the effect of the Single Market on firms’ mark-ups over marginal costs, we add these effects to the direct trade effects to come to a total estimate of the economic benefits of the Single Market of between 8% and 9% higher GDP on average for the EU.

JEL-codes: F13 F14 F15 F17 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2019-02
New Economics Papers: this item is included in nep-eec and nep-int
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:094

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