The Welfare Gains of Trade Integration in the European Monetary Union

Stéphane Auray, Aurélien Eyquem and Jean-Christophe Poutineau ()

Cahiers de recherche from Departement d'économique de l'École de gestion à l'Université 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)
Pages: 27 pages
Date: 2008
New Economics Papers: this item is included in nep-cba, nep-eec and nep-opm
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http://gredi.recherche.usherbrooke.ca/wpapers/GREDI-0810.pdf First version, 2008 (application/pdf)

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 (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)
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Persistent link: https://EconPapers.repec.org/RePEc:shr:wpaper:08-10

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