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Modeling Inter- Korean Economic Integration

Author

Listed:
  • 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.

Suggested Citation

  • Noland, Marcus & Robinson, Sherman, 1998. "Modeling Inter- Korean Economic Integration," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 13, pages 426-463.
  • Handle: RePEc:ris:integr:0081
    as

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    Keywords

    Modeling; Inter-Korean; Economic; Integration;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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