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25 Years of Austria's EU Membership. Quantifying the Economic Benefits With a DSGE Model

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  • Fritz Breuss

Abstract

Austria's EU accession 25 years ago, alongside Finland and Sweden, was preceded by an extended period of convergence toward the EU: via the free trade agreement concluded with the EC in 1973, and the participation in the European Economic Area (EEA) in 1994. Although the COVID-19 crisis in 2020 seems to overshadow the overall positive balance of 25 years of EU membership, on average the real GDP growth dividend amounted to 0.8 percentage points per year since 1995. To check the robustness of this result, obtained with an integration macro model, a DSGE model for Austria is used here. Usually other methods are applied to estimate integration effects: trade gravity models, CGE models, macro models. Following in't Veld's (2019) approach with a DSGE model for the EU, we adapt an earlier version of the two-country DSGE model for Austria and the Euro area (Breuss and Rabitsch, 2009) to evaluate the benefits of Austria's EU membership. It turns out that grosso modo the macro results can be confirmed with the DSGE model.

Suggested Citation

  • Fritz Breuss, 2020. "25 Years of Austria's EU Membership. Quantifying the Economic Benefits With a DSGE Model," WIFO Working Papers 603, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2020:i:603
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    References listed on IDEAS

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    1. Andrei A. Levchenko & Jing Zhang, 2012. "Comparative advantage and the welfare impact of European integration [General equilibrium analysis of the Eaton–Kortum model of international trade]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 27(72), pages 567-602.
    2. Yvonne Wolfmayr, 2019. "Ungenutzte Handels- und Wohlfahrtspotentiale des Europäischen Binnenmarktes für Waren," WIFO Monatsberichte (monthly reports), WIFO, vol. 92(12), pages 891-906, December.
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    4. Fritz Breuss & Katrin Rabitsch, 2008. "An Estimated Two-Country DSGE Model of Austria and the Euro Area. FIW Working Paper," WIFO Studies, WIFO, number 60008, August.
    5. Thomas Barnebeck Andersen & Mikkel Barslund & Pieter Vanhuysse, 2019. "Join to Prosper? An Empirical Analysis of EU Membership and Economic Growth," Kyklos, Wiley Blackwell, vol. 72(2), pages 211-238, May.
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    7. Harald Badinger & Fritz Breuss, 2005. "Has Austria’s Accession to the EU Triggered an Increase in Competition? A Sectoral Markup Study," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(2), pages 145-180, June.
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    11. Fritz Breuss, 2018. "25 Years Single Market: Which Trade and Growth Effects?," WIFO Working Papers 572, WIFO.
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    14. Fritz Breuss & Katrin Rabitsch, 2009. "An estimated two-country DSGE model of Austria and the Euro Area," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 36(1), pages 123-158, February.
    15. Harald Oberhofer, 2019. "Die Handelseffekte von Österreichs EU-Mitgliedschaft und des Europäischen Binnenmarktes," WIFO Monatsberichte (monthly reports), WIFO, vol. 92(12), pages 883-890, December.
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    European Integration; Model simulations; country studies;
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