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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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  • 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

Suggested Citation

  • Einar Bowitz & Taran Fæhn & Leo Grünfeld & Knut Moum, 1997. "Can a Wealthy Economy Gain from an EU Membership? Adjustment Costs and Long Term Welfare Effects of Full Integration—The Norwegian Case," Open Economies Review, Springer, vol. 8(3), pages 211-231, July.
    • Handle: RePEc:kap:openec:v:8:y:1997:i:3:p:211-231
    DOI: 10.1023/A:1008286630510
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    References listed on IDEAS

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    Cited by:

    1. Ådne Cappelen & Torbjørn Eika, 2020. "Immigration and the Dutch disease A counterfactual analysis of the Norwegian resource boom 2004-2013," Open Economies Review, Springer, vol. 31(3), pages 669-690, July.
    2. Faehn, Taran & Grunfeld, Leo A., 1999. "Recent Leaps Towards Free Trade: The Impact on Norwegian Industry and Trade Patterns," Journal of Policy Modeling, Elsevier, vol. 21(6), pages 715-745, November.

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