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An Incumbent Country View on Eastern Enlargement of the EU. Part II: The Austrian Case

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  • Wilhelm Kohler
  • Chrisran Keuschnigg

Abstract

In part I of this paper, we have presented a general treatment of the welfare effect of an eastern EU enlargement on incumbent countries. Part II now takes a closer look at the Austrian case. We first present a few descriptive statistics on the role that east-west trade, as well as the pertinent trade barriers, play for the Austrian economy. We then argue that a numerical simulation, based on a suitably specified general equilibrium model, is an appropriate way towards a full evaluation of the welfare and distributional consequences of enlargement. Focusing on the Austrian case, we therefore implement an enriched and parameterized version of the general model used in part I of the paper. The model features savings and investment, based on intertemporal optimization, as well as sectoral allocation of capital and labor (skilled/unskilled), based on product differentiation and imperfect competition. In addition, the model incorporates a detailed representation of the government budget, featuring distortive taces and subsidies, as well as transfers to domestic households, and financial transactions with the EU. The model allows us to take a quantitative view on both the costs and integrations gains of en eastern enlargement. Relying on a Hicksian welfare measure which incorporates both long-run effects and short-run adjustment, our numerical simulations indicate that, in the Austrian case, the integration gains outweigh the fiscal burden.

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Bibliographic Info

Article provided by Springer in its journal Empirica.

Volume (Year): 28 (2001)
Issue (Month): 2 (June)
Pages: 159-185

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Handle: RePEc:kap:empiri:v:28:y:2001:i:2:p:159-185

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Web page: http://www.springerlink.com/link.asp?id=100261

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  1. André Sapir & Richard Baldwin & Daniel Cohen & Anthony Venables, 1999. "Market integration, regionalism and the global economy," ULB Institutional Repository 2013/8074, ULB -- Universite Libre de Bruxelles.
  2. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  3. Black,Stanley W., 2008. "Europe's Economy Looks East," Cambridge Books, Cambridge University Press, number 9780521088237.
  4. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR & CES & MSH, vol. 12(24), pages 125-176, 04.
  5. Deardoff, A.V. & Brown, D.K. & Stern, R.M. & Djankov, S.D., 1995. "An Economic Assessment of the Integration of Czechoslovakia, Hungary, and Poland into the Europan Union," Working Papers 380, Research Seminar in International Economics, University of Michigan.
  6. Anderson, Kym & Tyers, Rodney, 1993. "Implications of EC Expansion for European Agricultural Policies, Trade and Welfare," CEPR Discussion Papers 829, C.E.P.R. Discussion Papers.
  7. Keuschnigg, Christian & Kohler, Wilhelm, 2002. "Eastern Enlargement of the EU: How Much Is It Worth for Austria?," Review of International Economics, Wiley Blackwell, vol. 10(2), pages 324-42, May.
  8. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
  9. Fumio Hayashi, 1981. "Tobin's Marginal q and Average a : A Neoclassical Interpretation," Discussion Papers 457, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Wilhelm Kohler, 2000. "Internationale Migration: Anmerkungen aus der Sicht der Aussenwirtschaftstheorie," Economics working papers 2000-22, Department of Economics, Johannes Kepler University Linz, Austria.
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Cited by:
  1. Ben J. Heijdra & Christian Keuschnigg & Wilhelm Kohler, 2001. "Eastern enlargement of the EU: Jobs, investment and welfare in present member countries," Economics working papers 2001-11, Department of Economics, Johannes Kepler University Linz, Austria.
  2. Wilhelm Kohler, 2003. "Eastern Enlargement of the EU: A Comprehensive Welfare Assessment," Economics working papers 2003-16, Department of Economics, Johannes Kepler University Linz, Austria.
  3. repec:onb:oenbwp:y::i:61:b:1 is not listed on IDEAS
  4. Torstein Bye & Erling Erling Holmoy, 2010. "Removing Policy-based Comparative Advantage for Energy Intensive Production: Necessary Adjustments of the Real Exchange Rate and Industry Structure," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 177-198.

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