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

  • Michael Funke

    (Hamburg University)

  • Holger Strulik

    (Hamburg University)

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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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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  18. 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.
  19. 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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