Implications of Near-Autarky for North Korean Economy

Abstract

This paper introduces a notion of near-autarky to describe the following features of North Korean economy: economic sanctions, more than 40 percents of trade dependency, chronic trade deficits, and monopolistic trade with China. The model in this paper is a dynamic stochastic general equilibrium(DSGE) model modified to incorporate the above features. The result show that North Korea have no incentive to deviate from the current situation. And also the fact that North Korea's biggest trade partner is China weakens the effectiveness of economic sanctions against North Korea.