SEI conference
16-17 July 2007
What have we learned from modelling
European economic integration?
Alasdair Smith
University of Sussex
alasdair@sussex.ac.uk
What have we learned from modelling
European economic integration?
•1987 paper on Completing the internal market
•Subsequent developments
•The uses and abuses of modelling
1987 EER Smith-Venables paper
• Partial equilibrium
• Imperfect competition, with product differentiation and scale
economies
• Options on entry/exit and market integration
• Calibrated to data on industry structures and scale economies
• Large but defensible estimates of effects of SEM, especially
with market integration
Subsequent work
1. The European car market
2. General equilibrium
3. EU-CEEC trade
4. The effects of external trade policy
5. Ex-post modelling
The uses and abuses of modelling
• Is it just theory with numbers?
• Model dependence of results – eg. X-inefficiency?
• Discipline – imposing some consistency
• Sophisticated arithmetic – eg. GE results
• Getting theory aligned with economic arithmetic