Modeling the Economic Impacts of Korean Unification
Date
2018
Authors
Lee, Jong-Wha
Liu, Weifeng
Song, Cheol Jong
McKibbin, Warwick
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Blackwell Publishing Ltd
Abstract
This paper explores the economic impacts of Korean unification on North and South Korea. It presents a new consistent database on macroeconomic, sectoral and trade data, and an input–output table for the North Korean economy, and then incorporates it in a global intertemporal multi‐sector general equilibrium model. Assuming hypothetical scenarios such as North Korea's reform and gradual convergence, its sudden collapse and immediate unification, and chaos and crises in both Koreas, we quantify the consequences of Korean unification on economic activity, trade and capital flows in the two Koreas. The results highlight the importance of the unification processes and of alternative policy responses in both Koreas to the economic impacts of unification.
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Keywords
convergence, dynamic general equilibrium, economic integration, economic growth, Korean unification, North Korea
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Source
Asian Economic Journal
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Journal article
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Open Access
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