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The Cost of Non-Europe, Revisited

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  • Thierry Mayer
  • Vincent Vicard
  • Soledad Zignago

Abstract

In this paper we quantify the Cost of Non-Europe, i.e. the trade-related welfare losses that would occur under different scenarios of undoing the European Union. Thirty years after the terminology of Non-Europe was used to give estimates of the gains from further integration, we use modern versions of the gravity model to quantify the trade creation implied by the EU, and apply those to counterfactual exercises where for instance the EU returns to a shallow-type free trade regional agreement, or reverts to WTO rules. Those scenarios are envisioned with or without the Brexit happening, which points to interesting cross-country differences and potential cascade effects in doing and undoing of trade agreements.

Suggested Citation

  • Thierry Mayer & Vincent Vicard & Soledad Zignago, 2018. "The Cost of Non-Europe, Revisited," Working papers 673, Banque de France.
  • Handle: RePEc:bfr:banfra:673
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gancia, Gino & Ponzetto, Giacomo A.M. & Ventura, Jaume, 2020. "A theory of economic unions," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 107-127.
    2. Patrick Bisciari, 2019. "A survey of the long-term impact of Brexit on the UK and the EU27 economies," Working Paper Research 366, National Bank of Belgium.
    3. Kern, Milena & Paetzold, Joerg & Winner, Hannes, 2018. "Cutting Red Tape for Trade in Services," Working Papers in Economics 2018-9, University of Salzburg.
    4. Santana-Gallego, Maria & Pérez-Rodríguez, Jorge V., 2019. "International trade, exchange rate regimes, and financial crises," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 85-95.
    5. Rita Cappariello & Sebastián Franco-Bedoya & Vanessa Gunnella & Gianmarco Ottaviano, 2020. "Rising Protectionism and Global Value Chains: Quantifying the General Equilibrium Effects," Temi di discussione (Economic working papers) 1263, Bank of Italy, Economic Research and International Relations Area.
    6. Jan in ‘t Veld, 2019. "Quantifying the Economic Effects of the Single Market in a Structural Macromodel," European Economy - Discussion Papers 2015 - 094, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. Aichele, Rahel & Heiland, Inga, 2018. "Where is the value added? Trade liberalization and production networks," Journal of International Economics, Elsevier, vol. 115(C), pages 130-144.
    8. Fritz Breuss, 2020. "25 Years of Austria's EU Membership. Quantifying the Economic Benefits With a DSGE Model," WIFO Working Papers 603, WIFO.
    9. in ’t Veld, Jan, 2019. "The economic benefits of the EU Single Market in goods and services," Journal of Policy Modeling, Elsevier, vol. 41(5), pages 803-818.
    10. Sondermann, David & Lehtimäki, Jonne, 2020. "Baldwin vs. Cecchini revisited: the growth impact of the European Single Market," Working Paper Series 2392, European Central Bank.

    More about this item

    Keywords

    Trade integration; Gravity; European Union.;

    JEL classification:

    • F1 - International Economics - - Trade

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