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Gains from Financial Integration in the European Union: Evidence for New and Old Members

Yuliya Demyanyk () and Vadym Volosovych ()

No 6009, Working Papers from Department of Economics, College of Business, Florida Atlantic University

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: EU enlargement; financial integration; welfare gains; risk sharing (search for similar items in EconPapers)
JEL-codes: E32 F15 F36 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2006-12, Revised 2007-08
New Economics Papers: this item is included in nep-eec, nep-mac and nep-upt
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Journal Article: Gains from financial integration in the European Union: Evidence for new and old members (2008) Downloads
Working Paper: Gains from financial integration in the European union: evidence for new and old members (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:fal:wpaper:06009

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