Fung Kwan: This paper examines the hypothetical reunification of South Korea and North Korea, which is a highly political issue. Although the research question is far beyond total factor productivity (TFP), the authors’ aspiring work on such a complicated undertaking is appreciated.
The authors’ analysis uses calibrations based on TFP growth values, per capita GDP, population, and capital stock under different scenarios and economic development in East and West Germany. The theoretical framework is standard with the CRS C-D production function, having physical capital and labor being the conventional factor inputs. The TFP growth equation in equation (3) tries to capture the speed of convergence of a particular economy. To measure the impacts of reunification, the paper examines:
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Migration with workers moving from the economy with relatively low pay to that of high pay
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Physical capital moving to the poorer economy via the government's effort
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TFP convergence,...