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Impact of Cross‐Strait Trade Liberalization: A Computable General Equilibrium Analysis

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  • Kun‐Ming Chen
  • Meng‐Chia Tsai
  • Chia‐Ching Lin
  • Chaw‐hsia Tu

Abstract

This paper applies a computable general equilibrium model to investigate the potential economic effects of trade liberalization across the Taiwan Strait. Our simulation results reveal that cross‐Strait trade liberalization will have significant positive impacts on external trade, domestic investment and real GDP for the economies in this area in general and in Taiwan in particular. Furthermore, the negative impact from the formation of a free trade arrangement between Taiwan and Chinese Mainland on Hong Kong seems to be rather small. These results suggest that cross‐Strait trade liberalization is very likely to bring about a win–win situation for the economies in this area.

Suggested Citation

  • Kun‐Ming Chen & Meng‐Chia Tsai & Chia‐Ching Lin & Chaw‐hsia Tu, 2009. "Impact of Cross‐Strait Trade Liberalization: A Computable General Equilibrium Analysis," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(6), pages 106-122, November.
    • Handle: RePEc:bla:chinae:v:17:y:2009:i:6:p:106-122
    DOI: 10.1111/j.1749-124X.2009.01176.x
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    References listed on IDEAS

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    Cited by:

    1. Chang, Kuo-I & Hayakawa, Kazunobu, 2012. "Selection and utilization of the early harvest list : evidence from the Free Trade Agreement between China and Taiwan," IDE Discussion Papers 365, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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