The Cost of Non-Europe, Revisited

48 Pages Posted: 12 Apr 2018

See all articles by Thierry Mayer

Thierry Mayer

Institut d'Etudes Politiques de Paris (Sciences Po)

Vincent Vicard

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Soledad Zignago

Banque de France

Multiple version iconThere are 2 versions of this paper

Date Written: April 2018

Abstract

In this paper we quantify the "Cost of Non-Europe", i.e. the trade-related welfare gains each country member has reaped from 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 estimate the trade creation implied by the EU, and apply those to counterfactual exercises where for instance the EU returns to a "normal", shallow-type regional agreement, or reverts to WTO rules. Those scenarios are envisioned with or without the exit of the United Kingdom from the EU (Brexit) happening, which points to interesting cross-country differences and potential cascade effects in doing and undoing of trade agreements.

Keywords: European Union, Gravity, trade integration

JEL Classification: F1

Suggested Citation

Mayer, Thierry and Vicard, Vincent and Zignago, Soledad, The Cost of Non-Europe, Revisited (April 2018). CEPR Discussion Paper No. DP12844, Available at SSRN: https://ssrn.com/abstract=3159147

Thierry Mayer (Contact Author)

Institut d'Etudes Politiques de Paris (Sciences Po) ( email )

Vincent Vicard

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

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Paris Cedex 07, F-75334
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