This paper estimates the economic costs and benefits of enlargement of the EU for incumbent member states and East European candidates for accession. We use simulations in a global applied general equilibrium model. We include a scenario in which accession significantly reduces the risk premium on investment in the East, with resulting huge benefits to the new entrants. We also review the literature on the EU budget costs and arrive at a ‘consensus’ estimate, which we support with a new political economy analysis of the budget. The bottom line is unambiguous and strongly positive: enlargement is a very good deal for both the EU incumbents and the new members.

'The Costs and Benefits of Eastern Enlargement' (with R. Baldwin and J. Francois), Economic Policy 21, April 1997, pp. 125-176

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