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Implicit Trade Costs and European Single Market Enlargement

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Edwards, Terence Huw

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Abstract This paper investigates the deeper integration of the new EU accession states into the Single Market. Building on the assumption that observed trade patterns can be taken to reveal trading costs between members and non-members of a bloc, I develop a model-consistent Dixit-Stiglitz general equilibrium-based calibration technique. Using this, I investigate numerically the effects of the recent EU enlargement, suggesting that deeper integration, which removed the border costs implied by 1990s trade patterns, could raise trade by 50-100% and incomes in the accession states by 10-20%.
Document language English
Publication Year 2008
Page/Pages p. 2601-2613
Journal Applied Economics, 40 (2008) 20
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)