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Modeling Inter- Korean Economic Integration

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Author Info

  • Noland, Marcus

    ()
    (Institute for International Economics (IIE))

  • Robinson, Sherman

    (International Food Policy Research Institute (IFPRI))

Abstract

We construct the Korean Integration Model (KIM), a two-country com - putable general equilibrium (CGE) model linking the North and South Kore - an economies. Using KIM, we simulate the impact of a customs union and a monetary union of the two economies both in the presence and absence of crossborder factor mobility. Factor mobility is of critical importance. If factor mar - kets do not integrate, the macroeconomic impact on South Korea of economic integration with the North is relatively small, while the effects on North Korea are large. With a monetary union and factor market integration, there is a sig - nificant impact on the South Korean income and wealth distribution. If invest - ment flows from South to North and labor flows from North to South, there is a shift in the South Korean income distribution toward capital, and within labor toward urban high skill labor, suggesting growing income and wealth inequali - ty in the South.

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Bibliographic Info

Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

Volume (Year): 13 (1998)
Issue (Month): ()
Pages: 426-463

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Handle: RePEc:ris:integr:0081

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Web page: http://econo.sejong.ac.kr/
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Keywords: Modeling; Inter-Korean; Economic; Integration;

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