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Worthy Transfers ? A Dynamic Analysis of Turkey’s Accession to the European Union



    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))


    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) FNRS)


In this paper, we build a two-country dynamic general equilibrium model to study whether European citizens would benefit from the eventual accession of Turkey to the European Union. The results of the simulations show that Turkey's accession to the European Union is welfare enhancing for Europeans, provided that Turkish total factor productivity (TFP) increases sufficiently after enlargement. In the model with no capital mobility, the Europeans are better off it the Turkish TFP increase bridges more than 31% of the initial TFP gap between Turkey and the European Union. That figure becomes 45% when capital mobility is introduced.

Suggested Citation

  • Gul ERTAN OZGUZER & Luca PENSIEROSO, 2009. "Worthy Transfers ? A Dynamic Analysis of Turkey’s Accession to the European Union," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009029, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2009029

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    References listed on IDEAS

    1. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 624-660, June.
    2. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    3. O. Galor & H. M. Polemarchakis, 1987. "Intertemporal Equilibrium and the Transfer Paradox," Review of Economic Studies, Oxford University Press, vol. 54(1), pages 147-156.
    4. V. V Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2002. "Can Sticky Price Models Generate Volatile and Persistent Real Exchange Rates?," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 533-563.
    5. Jesus Crespo Cuaresma & Doris Ritzberger-Grunwald & Maria Antoinette Silgoner, 2008. "Growth, convergence and EU membership," Applied Economics, Taylor & Francis Journals, vol. 40(5), pages 643-656.
    6. M-super-a Jesús Delgado-Rodríguez & Inmaculada Álvarez-Ayuso, 2008. "Economic Growth and Convergence of EU Member States: An Empirical Investigation," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 486-497, August.
    7. Moomaw, Ronald L. & Yang, Euy-Seok, 2004. "Total factor productivity and economic freedom implications for EU enlargement," ZEI Working Papers B 02-2004, University of Bonn, ZEI - Center for European Integration Studies.
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    More about this item


    European Union; Turkey; Enlargement; Dynamic General Equilibrium; Open Economy Macroeconomics;

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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