An Empirical Analysis on Korean Consumer Welfare Levels Accounting for U.S.A. Product Price Fluctuations After the Korea-U.S.A. FTA Effectuation

As the Korea-US FTA comes into force, economic exchanges are being actively and lively made, and the follow-up effects are expected to increase in all sectors, such as GDP, consumer welfare, employment, exports, import, trade balance and foreign investment in terms of the macro-economy. In addition, the ensuing reduction in tariffs on US products is expected to improve consumer welfare by increasing imports and lowering domestic consumer prices. With the domestic consumers of US goods, the present study aims to compare the US product prices before and after the effectuation of the Korea-US FTA and to measure the consumer welfare pursuant to the changes in product prices. The analysis shows the following results. First, meat, juice (beverage) and groceries (nuts) satisfied welfare by decreasing in price after the effectuation of the FTA. Second, meat, groceries(nuts), clothes and fashion products have significant influences on welfare according to the multiple regression analysis. One consistent result is that the decrease in tariffs leads to drops in consumer prices and then increases in consumer welfare.