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The Welfare Gains of Trade Integration in the European Monetary Union

  • Stéphane Auray

    (EQUIPPE - Economie Quantitative, Intégration, Politiques Publiques et Econométrie - PRES Université Lille Nord de France - Université de Lille, Sciences Humaines et Sociales - Université de Lille, Sciences et Technologies - Université de Lille, Droit et Santé)

  • Aurélien Eyquem

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon)

  • Jean-Christophe Poutineau

    (CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique)

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 financial 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 gains while (ii) an increase in horizontal trade implies welfare losses.

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Paper provided by HAL in its series Post-Print with number halshs-00464213.

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Date of creation: 2009
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Publication status: Published in Working Paper GATE 2009-27. Working Paper GATE 2009-27. 2009
Handle: RePEc:hal:journl:halshs-00464213
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00464213
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