This paper provides comprehensive discussion on problems of conventional monetary policies in their role for handling aggregate liquidity to achieve financial stability. This issue is getting more attentions as the ongoing global financial crisis becomes more serious.
Our study on this issue is threefold. First, we present discussion on the various factors, including institutional ones, that brought out global excess liquidity and asset price bubbles. Second, we report descriptive analysis that shows weakened control of the interest rate policy on monetary liquidity in Korean economy, and in order to explain it we estimate a two-stage model analysing the determinants of the liquidity level. Third, we introduce and discuss some possible ways to improve the situation.
Our estimation provides evidence that the BOK's tightening policy rate became observably ineffective mainly due to the long-run trend of rising house prices. It also shows that the increase in the money base by the huge current account surplus is able to partly explain its ineffectiveness.
통화정책의 유동성 관리능력 저하와 금융안정 관련 정책적 함의(Monetary policy scheme and financial stability)
|Series Title; No||금융조사보고서 / 2009-04|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||한국금융연구원; KDI 국제정책대학원|