The Welfare Gains of Trade Integration in the European Monetary Union

Stéphane Auray, Aurélien Eyquem, Jean-Christophe Poutineau, GATE Working Paper Series
2009 Social Science Research Network  
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 ...nancial markets, sticky prices and home bias both in private consumption and production. The model is estimated and globally not rejected by the data. Two main results emerge : (i) an increase in vertical (intermediate goods) trade implies welfare
more » ... e implies welfare gains while (ii) an increase in horizontal trade implies welfare losses.
doi:10.2139/ssrn.1553676 fatcat:gh5v6uj6evbovhbjfxju4ep4ly