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European Integration and Switzerland: A Synthetic Control Analysis of Switzerland’s Trade Potential if Switzerland Had Joined the European Union

Neubauer, Linda Jasmin LU (2023) NEKP01 20231
Department of Economics
Abstract
The objective of this paper is to investigate how Switzerland’s trade outcomes would have evolved had it decided to join the EU. Using the 1995 EU enlargement for identification, the synthetic control method is applied to construct a counterfactual scenario in which Switzerland joined the EU in 1995 together with Sweden, Finland, and Austria. Comparing the actual and the synthetic bilateral trade flows between Switzerland and seven selected EU member countries leads to the conclusion that annual bilateral trade between Switzerland and the EU member states in the period 1995 to 2008 would have been on average around 1.1 percentage points higher if Switzerland joined the EU in 1995. This effect is shown to evolve over time, with some... (More)
The objective of this paper is to investigate how Switzerland’s trade outcomes would have evolved had it decided to join the EU. Using the 1995 EU enlargement for identification, the synthetic control method is applied to construct a counterfactual scenario in which Switzerland joined the EU in 1995 together with Sweden, Finland, and Austria. Comparing the actual and the synthetic bilateral trade flows between Switzerland and seven selected EU member countries leads to the conclusion that annual bilateral trade between Switzerland and the EU member states in the period 1995 to 2008 would have been on average around 1.1 percentage points higher if Switzerland joined the EU in 1995. This effect is shown to evolve over time, with some evidence of anticipation effects prior to 1995. The results are robust to a variety of model specifications and standard falsification tests. (Less)
Please use this url to cite or link to this publication:
author
Neubauer, Linda Jasmin LU
supervisor
organization
course
NEKP01 20231
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Switzerland, Synthetic Control, European Integration, Trade
language
English
id
9130815
date added to LUP
2023-09-04 09:08:41
date last changed
2023-09-04 09:08:41
@misc{9130815,
  abstract     = {{The objective of this paper is to investigate how Switzerland’s trade outcomes would have evolved had it decided to join the EU. Using the 1995 EU enlargement for identification, the synthetic control method is applied to construct a counterfactual scenario in which Switzerland joined the EU in 1995 together with Sweden, Finland, and Austria. Comparing the actual and the synthetic bilateral trade flows between Switzerland and seven selected EU member countries leads to the conclusion that annual bilateral trade between Switzerland and the EU member states in the period 1995 to 2008 would have been on average around 1.1 percentage points higher if Switzerland joined the EU in 1995. This effect is shown to evolve over time, with some evidence of anticipation effects prior to 1995. The results are robust to a variety of model specifications and standard falsification tests.}},
  author       = {{Neubauer, Linda Jasmin}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{European Integration and Switzerland: A Synthetic Control Analysis of Switzerland’s Trade Potential if Switzerland Had Joined the European Union}},
  year         = {{2023}},
}