The United States of Europe: A Gravity Model Evaluation of the Four Freedoms

Keith Head and Thierry Mayer

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Abstract: One of the pillars of the 1957 Treaty of Rome that ultimately led to the European Union is the commitment to the four freedoms of movement (goods, services, persons, and capital). Over the following decades, as the members expanded in numbers, they also sought to deepen the integration amongst themselves in all four dimensions. This paper estimates the success of these policies based primarily on a gravity framework. Distinct from past evaluations, we augment the traditional equation for international flows with the corresponding intra-national flows, permitting us to distinguish welfare-improving reductions in frictions from Fortress-Europe effects. We complement the gravity approach by measuring the extent of price convergence. We compare both quantity and price assessments of free movement with corresponding estimates for the 50 American states.

Date: 2021-05-01
New Economics Papers: this item is included in nep-his, nep-int and nep-opm
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03796129v1
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Published in Journal of Economic Perspectives, 2021, 35 (2), pp.23-48. ⟨10.1257/jep.35.2.23⟩

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Journal Article: The United States of Europe: A Gravity Model Evaluation of the Four Freedoms (2021)
Working Paper: The United States of Europe: A gravity model evaluation of the four freedoms (2021)
Working Paper: The United States of Europe: A Gravity Model Evaluation of the Four Freedoms (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03796129

DOI: 10.1257/jep.35.2.23

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