Working Paper: CEPR ID: DP12844
Authors: Thierry Mayer; Vincent Vicard; Soledad Zignago
Abstract: In this paper we quantify the ``Cost of Non-Europe'', i.e. the trade-related welfaregains each country member has reaped from the European Union. Thirty yearsafter the terminology of Non-Europe was used to give estimates of the gains fromfurther integration, we use modern versions of the gravity model to estimate thetrade creation implied by the EU, and apply those to counterfactual exercises wherefor instance the EU returns to a ``normal'', shallow-type regional agreement,or reverts to WTO rules. Those scenarios are envisionedwith or without the exit of the United Kingdom from the EU (Brexit)happening, which points to interesting cross-countrydifferences and potential cascade effects in doing and undoing oftrade agreements.
Keywords: trade integration; gravity; European Union
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| EU membership (F36) | trade creation effects (F14) |
| EU membership (F36) | welfare gains (D69) |
| EU membership (F36) | trade creation effects (smaller economies) (F12) |
| PPML (Y20) | trade gains (F19) |
| trade agreements (F13) | direct and indirect effects (C32) |
| EU integration (F15) | dynamic gains from trade (F12) |