This is intuitive since a reduction in the barriers to trade can be associated with better terms of trade, which in turn are usually linked to higher welfare.5 Under a few standard  4  TFP figures computed based on the 2014 Penn World Tables. Measuring the terms of trade accurately can be a difficult task. However, the methodology developed by Arkolakis et al.
Secondly, euro area countries were bound by the “no-bail-out” rule and the Stability and Growth Pact. They were supposed to implement the necessary structural and fiscal policies to ensure sound and sustainable economic positions within EMU. However, when we look backwards, the joint responsibility for effective surveillance too often took the form of “peer support” instead of “peer pressure”.