The United States of Europe: a Gravity Model Evaluation of the Four Freedoms

28 Pages Posted: 31 Mar 2021

See all articles by Keith Head

Keith Head

University of British Columbia (UBC) - Division of Strategy and Business Economics

Thierry Mayer

Institut d'Etudes Politiques de Paris (Sciences Po)

Date Written: March 2021

Abstract

One of the pillars of the 1957 Treaty of Rome that ultimately led to the European Union is the commitment to the four freedoms of movement (goods, services, persons, and capital). Over the following decades, as the members expanded in numbers, they also sought to deepen the integration between themselves in all four dimensions. This paper estimates the success of these policies based primarily on a gravity framework. Distinct from past evaluations, we augment the traditional equation for international flows with the corresponding intra-national flows, permitting us to distinguish welfare-improving reductions in frictions from Fortress Europe effects. We complement the gravity approach by measuring the extent of price convergence. We compare both quantity and price assessments of free movement with corresponding estimates for the 50 American states.

Suggested Citation

Head, Keith and Mayer, Thierry, The United States of Europe: a Gravity Model Evaluation of the Four Freedoms (March 2021). CEPR Discussion Paper No. DP15982, Available at SSRN: https://ssrn.com/abstract=3816869

Keith Head (Contact Author)

University of British Columbia (UBC) - Division of Strategy and Business Economics ( email )

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Vancouver, British Columbia
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HOME PAGE: http://strategy.sauder.ubc.ca/head/

Thierry Mayer

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

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