Can a Wealthy Economy Gain from an EU Membership? Adjustment Costs and Long Term Welfare Effects of Full Integration—The Norwegian Case

Einar Bowitz (), Taran Fæhn, Leo Grünfeld and Knut Moum

Open Economies Review, 1997, vol. 8, issue 3, 231 pages

Abstract: We employ a large scale macroeconometric model to study adjustment problems and long term welfare effects of a Norwegian EU-membership. Accession costs depend significantly on the country's level of GDP, the size of its agricultural sector and tariff and VAT revenues as these elements determine the net membership contribution. Without the transfers, integrating the economy into EU generates a small welfare gain. This result is strongly affected by a long period with under-utilisation of resources. With the net contribution included, we identify a welfare loss. This is especially so if fiscal policy is changed to maintain the public sector budgetary balance. Copyright Kluwer Academic Publishers 1997

Keywords: economic integration; EU participation; macroeconometric modelling (search for similar items in EconPapers)
Date: 1997
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DOI: 10.1023/A:1008286630510

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