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Spain, Split and Talk: Quantifying Regional Independence

Author

Listed:
  • Hanna Adam

    (University of Bayreuth)

  • Mario Larch

    (University of Bayreuth. CEPII, CESifo, ifo Institute, GEP)

  • Jordi Paniagua

    (University of Valencia. Kellogg Institute, University of Notre Dame)

Abstract

We quantify the economic impact of a potential secession of Catalonia from Spain. Using a novel dataset of trade flows between 17 Spanish sub-national regions and 142 countries, we estimate the effects of different levels of borders on trade flows and uncover heterogeneity in regional, national, and EU border effects. We use a general equilibrium analysis of trade with fiscal transfers to understand the consequences of a potential secession with political uncertainty. In counterfactual experiments, we impose new borders on Catalan regional and international trade, potentially within or outside the EU, resulting in a welfare decline for Catalonia and Spain.

Suggested Citation

  • Hanna Adam & Mario Larch & Jordi Paniagua, 2024. "Spain, Split and Talk: Quantifying Regional Independence," Working Papers 2409, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2409
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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