Worthy Transfers ? A Dynamic Analysis of Turkey’s Accession to the European Union

In this paper, we build a two-country dynamic general equilibrium model to study whether European citizens would benefit from the eventual accession of Turkey to the European Union. The results of the simulations show that Turkey's accession to the European Union is welfare enhancing for Europeans, provided that Turkish total factor productivity (TFP) increases sufficiently after enlargement. In the model with no capital mobility, the Europeans are better off it the Turkish TFP increase bridges more than 31% of the initial TFP gap between Turkey and the European Union. That figure becomes 45% when capital mobility is introduced.European Union, Turkey, Enlargement, Dynamic General Equilibrium, Open Economy Macroeconomics

Worthy Transfers? A Dynamic Analysis of Turkey's Accession to the European Union

We build a two-country dynamic general equilibrium model to study whether European citizens would benet from the eventual accession of Turkey to the European Union. The results of the simulations show that Turkey's accession to the European Union is welfare enhancing for Europeans, provided that Turkish total factor productivity (TFP) increases suciently after enlargement. In the model with no capital mobility, the Europeans are better o if the Turkish TFP increase bridges more than 31% of the initial TFP gap between Turkey and the European Union. That gure becomes 45% when capital mobility is introduced.European Union, Turkey, Enlargement, Dynamic General Equilibrium, Open Economy Macroeconomics

A Sectoral Approach to the Surging Imports in Turkey

The dramatic surge in imports of goods and services without a concomitant surge in exports in Turkey deserves a sound explanation. The studies on the issue addressed increasing import dependency of the manufacturing sector in Turkey. This paper has attempted to scrutinize the reasons behind this phenomenon by looking not only at the manufacturing sector as the past studies did, but also at the other sectors of the economy. Using 1998 and 2002 Input -Output Tables, import requirement ratios have been calculated for 12 aggregate sectors. The results demonstrate that the contribution of the “wholesale and retail trade; repair of motor vehicles and household goods” sector to the increasing import dependency, hence to significantly rising imports, is greater than that of the manufacturing sector.Input-Output Model, import requirement ratio, sector analysis, Turkey

May Free Capital mobility before accession be unfavorable for admission to the EU ?

We examine the dynamics that may compensate the cost of redistribution policy in the European Union (EU), which is one of the obstacles for a candidate member country, namely Turkey to be admitted. We adress two main issues: 1/ may a total factor productivity (TFP) increase in the candidate country due to the positive effect of accession on institutional development compensate the cost of redistribution policy and 2/ may free capital mobility before accession decrease EU's incentive for admitting the candidate country. In a two-country model we assume that after Turkish accession, the European household gives a transfer to the Turkish household whereas an upward TFP shift arises in Turkey due to the positive effect of accession on institutional development. We first find that a TFP increase in Turkey compensates the cost of transfer. Second, allowing for free capital mobility before accession turns out to be unfavorable for admission to the EU