Implicit Trade Costs and European Single Market Enlargement
A major current issue in the economics of trade blocs is where the bloc is not just a customs union, but also incorporates substantial regulatory harmonisation or mutual recognition elements. The derivation of the costs of non-membership of such a bloc is not straightforward. In this paper I build on the assumption that observed trade pat- terns can be taken to reveal trading costs, and develop a model-consistent Dixit-Stiglitz general equilibrium-based calibration technique as an alternative to gravity methods previously used. I use the model to investigate numerically the likely trade e¤ects of the recent widening of the European Single Market to incorporate several Central and Eastern European Countries.
|Date of creation:||May 2005|
|Date of revision:||May 2005|
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- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
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- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. Full references (including those not matched with items on IDEAS)
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