TY  - JOUR
AU  - Bayoumi,Tamim
AU  - Laxton,Douglas
AU  - Pesenti,Paolo
TI  - Benefits and Spillovers of Greater Competition in Europe: A Macroeconomic Assesment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10416
PY  - 2004
Y2  - April 2004
UR  - http://www.nber.org/papers/w10416
L1  - http://www.nber.org/papers/w10416.pdf
N1  - Author contact info:
Tamim Bayoumi
International Monetary Fund
700 19th Street NW
Washington, DC 20431
E-Mail: tbayoumi@imf.org

Douglas Laxton
International Monetary Fund
700 19th Street
Washington, DC  20431
E-Mail: dlaxton@imf.org

Paolo A. Pesenti
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212/720-5493
Fax: 212/720-6831
E-Mail: paolo.pesenti@ny.frb.org
AB  - Using a general-equilibrium simulation model featuring nominal rigidities and monopolistic competition in product and labor markets, this paper estimates the macroeconomic benefits and international spillovers of an increase in competition. After calibrating the model to the euro area vs. the rest of the industrial world, the paper draws three conclusions. First, greater competition produces large effects on macroeconomic performance, as measured by standard indicators. In particular, we show that differences in competition can account for over half of the current gap in GDP per capita between the euro area and the US. Second, it may improve macroeconomic management by increasing the responsiveness of wages and prices to market conditions. Third, greater competition can generate positive spillovers to the rest of the world through its impact on the terms of trade.
ER  -