Growth and Convergence in a Two-Region Model: The Hypothetical Case of Korean Unification

Funke, Michael; Strulik, Holger

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Growth and Convergence in a Two-Region Model: The Hypothetical Case of Korean Unification

IMF Working Paper No. 02/26

HKIMR Working Paper No. 21/2003

24 Pages Posted: 30 Jan 2006

See all articles by Michael Funke

Michael Funke

University of Hamburg - Department of Economics; Tallinn University of Technology (TUT)

Holger Strulik

University of Goettingen (Göttingen) - School of Law, Economics, Social Sciences

There are 2 versions of this paper

Date Written: February 2002

Abstract

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 are required to make the North Korean economy economically viable.

Keywords: Korean Unification, Regional Convergence, Economic Growth

JEL Classification: O41, O52, H31, H40

Suggested Citation: Suggested Citation

Funke, Michael and Strulik, Holger, Growth and Convergence in a Two-Region Model: The Hypothetical Case of Korean Unification (February 2002). IMF Working Paper No. 02/26, HKIMR Working Paper No. 21/2003, Available at SSRN: https://ssrn.com/abstract=879378