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Impact of Cross‐Strait Trade Liberalization: A Computable General Equilibrium Analysis
Author(s) -
Chen KunMing,
Tsai MengChia,
Lin ChiaChing,
Tu Chawhsia
Publication year - 2009
Publication title -
china and world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.815
H-Index - 28
eISSN - 1749-124X
pISSN - 1671-2234
DOI - 10.1111/j.1749-124x.2009.01176.x
Subject(s) - computable general equilibrium , economics , international economics , free trade , liberalization , international trade , investment (military) , general equilibrium theory , trade barrier , macroeconomics , market economy , politics , political science , law
This paper applies a computable general equilibrium model to investigate the potential economic effects of trade liberalization across the Taiwan Strait. Our simulation results reveal that cross‐Strait trade liberalization will have significant positive impacts on external trade, domestic investment and real GDP for the economies in this area in general and in Taiwan in particular. Furthermore, the negative impact from the formation of a free trade arrangement between Taiwan and Chinese Mainland on Hong Kong seems to be rather small. These results suggest that cross‐Strait trade liberalization is very likely to bring about a win–win situation for the economies in this area.