Kiel Working Papers, Kiel Institute for World Economics
No 940:
Welfare Effects versus Income Effects of Poland's Integration into the European Union
Daniel Piazolo
Abstract: This paper presents a dynamic Computable General
Equilibrium (CGE) model for Poland's integration into the European Union
that allows for quantification of the income and welfare effects stemming
from
i) tariff reduction,
ii) border-cost reduction,
iii)
reduction of the technical barriers to trade,
iv) increased net
EU-transfers from Brussels.
For all channels, steady state national
income increases substantially compared with the reference scenario (status
quo). However, the welfare effects are surprisingly low. The intertemporal
findings show the importance of renouncing consumption today in order to
build up the capital stock necessary to achieve higher output and higher
consumption in the future. Large discrepancies between welfare and income
effects illustrate the importance of the recent discussion on welfare
versus income gains from trade liberalization, and stress the necessity of
an overall welfare measure in analyzing effects of regional integration.
Keywords: EU-Enlargement, Regionalism, Transition Countries, Dynamic Computable General Equilibrium Model.; (follow links to similar papers)
JEL-Codes: F15; D58; (follow links to similar papers)
56 pages, July 1999
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