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Growth and Convergence in a Two-region Moddel: The Hypothetical Case of Korean Unification

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Author Info

  • Michael Funke

    (Hamburg University)

  • Holger Strulik

    (Hamburg University)

Abstract

The paper discusses the impact and implications of Korean unification by setting up a two-region endogenous growth model. The numerical solutions are based on the formal analytical model, and have been calibrated so that they reflect the observed features of the North and South Korean economies. The numerical solutions provide evidence about the speed of convergence and the large amount of interregional transfers that would be required to make the North Korean economy economically viable. We also model the impact of foreign aid, migration and borrowing abroad for the transition process.

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Bibliographic Info

Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 212003.

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Length: 26 pages
Date of creation: Oct 2003
Date of revision:
Handle: RePEc:hkm:wpaper:212003

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Keywords: Korean Unification; Regional Convergence; Economic Growth;

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References

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  1. Alan J. Auerbach & Young Jun Chun & Ilho Yoo, 2005. "The Fiscal Burden of Korean Reunification: A Generational Accounting Approach," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 62-, March.
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  3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
  4. Marcus Noland & Sherman Robinson & Li-Gang Liu, 1998. "The Costs and Benefits of Korean Unification," Working Paper Series WP98-1, Peterson Institute for International Economics.
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  6. Brunner, Martin & Strulik, Holger, 2002. "Solution of perfect foresight saddlepoint problems: a simple method and applications," Journal of Economic Dynamics and Control, Elsevier, vol. 26(5), pages 737-753, May.
  7. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
  8. Marcus Noland, 2000. "Avoiding the Apocalypse: The Future of the Two Koreas," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 94, 1st quart.
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  10. Aghion, Philippe & Schankerman, Mark, 2000. "A Model Of Market-Enhancing Infrastructure," CEPR Discussion Papers 2462, C.E.P.R. Discussion Papers.
  11. Bradford, Scott C. & Phillips, Kerk L., 2008. "The Economic Reunification of Korea: A Dynamic General Equilibrium Model," MPRA Paper 23550, University Library of Munich, Germany.
  12. Aghion, Philippe & Schankerman, Mark, 1999. "Competition, Entry, and the Social Returns to Infrastructure in Transition Economies," CEPR Discussion Papers 2052, C.E.P.R. Discussion Papers.
  13. Boeri, Tito, 2000. "Structural Change, Welfare Systems, and Labour Reallocation: Lessons from the Transition of Formerly Planned Economies," OUP Catalogue, Oxford University Press, number 9780198293651, July.
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  15. Noland, Marcus & Robinson, Sherman & Wang, Tao, 2000. "Modeling Korean Unification," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 400-421, June.
  16. Michael Funke & Holge Strulik, 1999. "Growth and Convergence in a Two-Region Model of Unified Germany," CESifo Working Paper Series 206, CESifo Group Munich.
  17. Shioji, Etsuro, 2001. " Public Capital and Economic Growth: A Convergence Approach," Journal of Economic Growth, Springer, vol. 6(3), pages 205-27, September.
  18. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
  19. Kim, Se-Jik, 1998. "Growth effect of taxes in an endogenous growth model: to what extent do taxes affect economic growth?," Journal of Economic Dynamics and Control, Elsevier, vol. 23(1), pages 125-158, September.
  20. Ono, Y. & Shibata, A., 1990. "Spill-Over Effects Of Supply-Side Changes In A Two-Country Economy With Capital Accumulation," ISER Discussion Paper 0232, Institute of Social and Economic Research, Osaka University.
  21. Jimenez, Emmanuel, 1995. "Human and physical infrastructure: Public investment and pricing policies in developing countries," Handbook of Development Economics, in: Hollis Chenery† & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 43, pages 2773-2843 Elsevier.
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Cited by:
  1. Bradford, Scott C. & Phillips, Kerk L., 2008. "The Economic Reunification of Korea: A Dynamic General Equilibrium Model," MPRA Paper 23550, University Library of Munich, Germany.

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