GDP Growth Generated as a Result of Multiplier Reaction in Poland and the European Union on Account of Their Reciprocal Trade in the Years 1992–2007

Abstract

The article is aimed at presenting the effects of a multiplier reaction
on account of reciprocal trade between Poland and the European Union
in the form of the parties’ long-term GDP growth. Apart from the research
aspects, the work also involves methodological tasks, consisting in empiric
verification of the operational multiplier model – used for the first time
-in open economy. It is different from P. Samuelson’s model, although its
construction is also based on Keynes’ idea of a multiplier.
The results of the research lead to a conclusion that G. Haberler’s
statement and the opinion of the Austrian School followers on Keynes’
multiplier’s uselessness for empiric examinations are wrong. A result of the
research is a statistical estimation of multipliers of Poland and the European
Union-15 for individual years from 1992 to 2007 and average multipliers
for the whole 13 year period: for Poland on account of its trade with the
European Union – 2.6, and for the European Union on account of its trade
with Poland – 3.1. The GDP growth generated as a multiplier reaction and
calculated as a product of export increases scaled by adequate multipliers
reached €137 bn. in Poland in the whole examined period and a level of € 172
bn. in the European Union-15, i.e. 26% higher. However, the disproportion
in the income results shows a clearly declining tendency. During the first 11
years, the GDP growth in Poland was € 51 bn. while in the European Union
it was almost twice as much (€ 99 bn.). The sources of this big asymmetry
of the multiplier reactions results as well as the accelerated pace of its
disappearance can be explained by – depending on the level of economic
development – abilities to make use of markets extended as a result of the
integration. The article also presents income generating influence of the
whole export in Poland and the European Union-15 and it shows that this
influence is declining.