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Can a Wealthy Economy Gain from an EU Membership? Adjustment Costs and Long Term Welfare Effects of Full Integration—The Norwegian Case

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Author Info
Einar Bowitz ()
Taran Fæhn
Leo Grünfeld
Knut Moum
Abstract

We employ a large scale macroeconometric model to study adjustment problems and long term welfare effects of a Norwegian EU-membership. Accession costs depend significantly on the country's level of GDP, the size of its agricultural sector and tariff and VAT revenues as these elements determine the net membership contribution. Without the transfers, integrating the economy into EU generates a small welfare gain. This result is strongly affected by a long period with under-utilisation of resources. With the net contribution included, we identify a welfare loss. This is especially so if fiscal policy is changed to maintain the public sector budgetary balance. Copyright Kluwer Academic Publishers 1997

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File URL: http://hdl.handle.net/10.1023/A:1008286630510
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Publisher Info
Article provided by Springer in its journal Open Economies Review.

Volume (Year): 8 (1997)
Issue (Month): 3 (July)
Pages: 211-231
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Handle: RePEc:kap:openec:v:8:y:1997:i:3:p:211-231

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Related research
Keywords: economic integration; EU participation; macroeconometric modelling;

References listed on IDEAS
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  1. Winters, L. Alan, 1992. "European Trade and Welfare after `1992'," CEPR Discussion Papers 678, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Flam, H. & Nordstrom, H., 1995. "Why Do Pre-Tax Prices Differ so Much Across European Countries?," Papers 591, Stockholm - International Economic Studies.
  3. Jean Mercenier & Bernardin Akitoby, 1993. "On intertemporal general-equilibrium reallocation effects of Europe's move to a single market," Discussion Paper / Institute for Empirical Macroeconomics 87, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  4. Flam, Harry & Nordström, Håkan, 1995. "Why do Pre-tax Car Prices Differ so Much Across European Countries?," CEPR Discussion Papers 1181, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Gabrielle Antille & Marc Bacchetta & Fabrizio Carlevaro & Tobias Müller & Nicolas Schmitt, 1993. "Switzerland and the European Economic Area: A General Equilibrium Assessment of Some Measures of Integration," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 129(IV), pages 643-672, December. [Downloadable!]
  6. Keuschnigg, Christian & Kohler, Wilhelm, 1995. "Dynamic Effects of Tariff Liberalization: An Intertemporal CGE Approach," Review of International Economics, Blackwell Publishing, vol. 3(1), pages 20-35, February.
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  7. Capros, Pantelis & Karadeloglou, Pavlos & Mentzas, Gregory, 1991. "Market imperfections in a general equilibrium framework : An empirical analysis," Economic Modelling, Elsevier, vol. 8(1), pages 116-128, January. [Downloadable!] (restricted)
  8. Miller, Marcus H & Spencer, John E, 1977. "The Static Economic Effects of the UK Joining the EEC: A General Equilibrium Approach," Review of Economic Studies, Blackwell Publishing, vol. 44(1), pages 71-93, February. [Downloadable!] (restricted)
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