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An assessment of the Europe agreements' effects on bilateral trade, GDP, and welfare

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  • Egger, Peter
  • Larch, Mario

Abstract

The so-called Europe Agreements had been enacted in the 1990s to initiate the integration of goods markets between the 15 EU incumbent economies as of 1995 and 10 potential entrants located in Central and Eastern Europe. This paper evaluates the trade, GDP, and welfare effects of these agreements by means of structural analysis of a bilateral trade flow model. The results support three conclusions. First, the agreements exerted significant positive effects on goods trade between the EU15 incumbents and the CEEC and, at the same time, they induced trade redirection from other countries. Second, EU15 GDP responded by an increase of much less than 1% while that in the 10 CEEC increased by several percent in response to the agreements. Third, the effects on welfare were moderate in the EU15 but amounted to more double-digit percentage changes in the involved CEEC.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 55 (2011)
Issue (Month): 2 (February)
Pages: 263-279

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Handle: RePEc:eee:eecrev:v:55:y:2011:i:2:p:263-279

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Web page: http://www.elsevier.com/locate/eer

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Keywords: Gravity model Europe agreements Structural estimation GDP and welfare effects of trade agreements;

References

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Citations

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Cited by:
  1. Head, Keith & Mayer, Thierry, 2013. "Gravity Equations: Workhorse, Toolkit, and Cookbook," CEPR Discussion Papers 9322, C.E.P.R. Discussion Papers.
  2. Rahel Aichele, 2013. "Trade, Climate Policy and Carbon Leakage - Theory and Empirical Evidence," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, number 49, 8.
  3. Axel Dreher & Silvia Marchesi, 2013. "Information Transmission and Ownership Consolidation in Aid Programs," CESifo Working Paper Series 4437, CESifo Group Munich.
  4. Gabriel Felbermayr & Mario Larch & Lisandra Flach & Erdal Yalcin & Sebastian Benz & Finn Krüger, 2013. "Dimensionen und Effekte eines transatlantischen Freihandelsabkommens," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(04), pages 22-31, 02.
  5. Peter Egger & Michael Pfaffermayr, 2011. "Structural Estimation of Gravity Models with Path-Dependent Market Entry," FIW Research Reports series III-007, FIW.
  6. Christoph Moser & Andrew K. Rose, 2011. "Who Benefits from Regional Trade Agreements? The View from the Stock Market," NBER Working Papers 17415, National Bureau of Economic Research, Inc.
  7. Axel Dreher & Andreas Fuchs, 2011. "Rogue Aid? The Determinants of China’s Aid Allocation," Working Papers CEB 11-035, ULB -- Universite Libre de Bruxelles.
  8. Prehn, Soren & Brummer, Bernhard, 2011. "Estimation Issues in Single Commodity Gravity Trade Models," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114776, European Association of Agricultural Economists.
  9. Márquez-Ramos, Laura & Martínez-Zarzoso, Inmaculada & Suárez-Burguet, Celestino, 2012. "Trade policy versus trade facilitation: An application using good old OLS," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(11), pages 1-38.
  10. Richard Frensch & Jan Hanousek & Evžen Kočenda, 2012. "Specialization, gravity, and European trade in final goods," Working Papers 320, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  11. Prehn, Sören & Brümmer, Bernhard, 2011. "Estimation issues in disaggregate gravity trade models," DARE Discussion Papers 1107, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
  12. Prehn, Soren & Brummer, Bernhard, 2011. "Estimation Issues In Single Commodity Gravity Trade Models," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114524, German Association of Agricultural Economists (GEWISOLA).

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