Eastern Enlargement of the EU : A Comprehensive Welfare Assessment
This paper takes a welfare-view on eastern enlargement of the EU, focusing on incumbent countries. Enlargement is decomposed into three elements: Single-market integration on commodity markets, budgetary costs from EU-expenditure policies, and singlemarket- induced migration from new to present member countries. I first use an analytical model to derive a welfare equation that identifies the principle channels for incumbent country welfare gains and losses from enlargement, including product differentiation, capital accumulation, and unemployment due to search-costs. I then propose a method that allows to extend welfare results obtained from a detailed calibrated version of this model for Germany to other incumbent countries. The approach relies on model elasticities extracted from the German model which are then applied to other countries´ idiosyncratic "enlargement-shocks". Constructing detailed indices for such country specific "enlargement-shocks", I arrive at characteristic inter-country pattern of enlargement- induced welfare effects for all EU15 countries. Aggregating these across countries reveals enlargement to be beneficial for the union as a whole, although several countries stand to suffer welfare losses.
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- Christian Keuschnigg & Mirela Keuschnigg & Wilhelm Kohler, 2001. "The German Perspective on Eastern EU Enlargement," The World Economy, Wiley Blackwell, vol. 24(4), pages 513-542, 04.
- Keuschnigg, Christian & Kohler, Wilhelm K., 1998.
"Eastern Enlargement of the EU: How much is it Worth for Austria?,"
CEPR Discussion Papers
1786, C.E.P.R. Discussion Papers.
- 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.
- Christian Keuschnigg, 1998. "Investment Externalities and a Corrective Subsidy," International Tax and Public Finance, Springer, vol. 5(4), pages 449-469, October.
- Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
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