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Complex Europe: Quantifying Cost of Disintegration

Author

Listed:
  • Gabriel Felbermayr
  • Jasmin Gröschl
  • Inga Heiland
Abstract
On 1 January 2023, Croatia became the newest member of the Schengen Agreement of the European Union (EU) and also joined the Eurozone. This will not only mean a new currency and the elimination of border controls – allowing thus free movement within the Schengen area. It will also mean reductions in barriers to trade between Croatia and other EU member states. The Schengen Agreement and the Eurozone are part of the engine of European integration, namely the reduction of trading costs between the member countries in various dimensions as well as in trade with third countries. This includes the European Customs Union, the European Single Market, the Eurozone, the removal of customs barriers in the Schengen area and the EU’s free trade agreements with third countries – all of which are milestones that have created the world’s largest free-trade area in terms of value added. This article aims to highlight the importance of reducing trade costs and show what far-reaching effects a reversal of the European integration process through a gradual dismantling of these milestones would have on trade, production, and income across the EU member states and their trading partners.

Suggested Citation

  • Gabriel Felbermayr & Jasmin Gröschl & Inga Heiland, 2023. "Complex Europe: Quantifying Cost of Disintegration," EconPol Policy Brief 48, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpb:_48
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    Cited by:

    1. Felbermayr, Gabriel & Gröschl, Jasmin & Heiland, Inga, 2022. "Complex Europe: Quantifying the cost of disintegration," Journal of International Economics, Elsevier, vol. 138(C).
    2. Chowdhry, Sonali & Hinz, Julian & Kamin, Katrin & Wanner, Joschka, 2022. "Brothers in arms: The value of coalitions in sanctions regimes," Kiel Working Papers 2234, Kiel Institute for the World Economy (IfW Kiel).
    3. Gabriel Felbermayr & Hendrik Mahlkow & Alexander Sandkamp, 2023. "Cutting through the value chain: the long-run effects of decoupling the East from the West," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 50(1), pages 75-108, February.
    4. Ricardo Hausmann & Ulrich Schetter & Muhammed A Yildirim, 2024. "On the design of effective sanctions: the case of bans on exports to Russia," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 39(117), pages 109-153.
    5. Peter Eppinger & Gabriel J. Felbermayr & Oliver Krebs & Bohdan Kukharskyy, 2021. "Decoupling Global Value Chains," CESifo Working Paper Series 9079, CESifo.
    6. Gabriel Felbermayr & Oliver Krebs, 2023. "Der volkswirtschaftliche Schaden von Decoupling in Deutschland. Szenarien auf Bundes-, Kreis- und Sektorebene," WIFO Studies, WIFO, number 70757.
    7. de Lucio, Juan & Mínguez, Raúl & Minondo, Asier & Requena, Francisco, 2024. "The negative impact of disintegration on trade: The case of Brexit," European Economic Review, Elsevier, vol. 163(C).
    8. repec:wsr:ecbook:2022:i:viii-003 is not listed on IDEAS
    9. Borin, Alessandro & Conteduca, Francesco Paolo & Di Stefano, Enrica & Gunnella, Vanessa & Mancini, Michele & Panon, Ludovic, 2023. "Trade decoupling from Russia," International Economics, Elsevier, vol. 175(C), pages 25-44.
    10. Heid, Benedikt & Stähler, Frank, 2024. "Structural gravity and the gains from trade under imperfect competition: Quantifying the effects of the European Single Market," Economic Modelling, Elsevier, vol. 131(C).
    11. Pasimeni Paolo, 2024. "Twenty Years After the Big Enlargement: Integration Within the Single Market," Intereconomics: Review of European Economic Policy, Sciendo, vol. 59(4), pages 222-230.
    12. Gabriel Felbermayr, 2023. "Krieg mit anderen Mitteln," WIFO Monatsberichte (monthly reports), WIFO, vol. 96(2), pages 111-122, February.
    13. Kerényi, Ádám & Gulácsi, Gábor, 2023. "Magyarország elfordulása az Európai Unió derékhadától és az Unió válaszai [Hungarys turning away for the European Union and the EUs response]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1131-1172.
    14. repec:wsr:wpaper:y:2022:i:196 is not listed on IDEAS
    15. Flach, Lisandra & Heiland, Inga & Larch, Mario & Steininger, Marina & Teti, Feodora A., 2023. "Quantifying the partial and general equilibrium effects of sanctions on Russia," Open Access Publications from Kiel Institute for the World Economy 302103, Kiel Institute for the World Economy (IfW Kiel).
    16. Gulácsi, Gábor & Kerényi, Ádám, 2024. "A magyar gazdaság felzárkózása és pozíció vesztése az Európai Unióban [The Hungarian economy's convergence and losing postion in the European Union]," MPRA Paper 121131, University Library of Munich, Germany.
    17. Joseph Kopecky, 2024. "A Match Made in Maastricht: Estimating The Treatment Effect of the Euro On Trade," Open Economies Review, Springer, vol. 35(1), pages 159-187, February.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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