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Post-crisis macroeconomic policies in Korea

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Frame of Image vailed on the Korean economy over the past four decades. Excessive debt leverage and pervasive moral hazards in the corporate sector, poor risk management by financial institutions, labor market rigidity and lax prudential regulation and supervision are all in the list of structural weakness that have characterized the Korean economy before the crisis. This diagnosis implies that Korea needed structural measure, not just macroeconomic adjustments, to overcome the crisis. And indeed the IMF programs for Korea did call for many structural measures ranging from closing of troubled banks and corporate governance reform to full liberalization of capital market, not to mention policy measures to induce swift macroeconomic adjustments. Upon the policy consultation with the IMF, Korea successfully implemented various reforms and pursued major restructuring of financial and corporate sector. Korea’s reform success, although not fully satisfactory yet, has been cited as the main driver of Korea’s quick recovery from the crisis. Nonetheless, macroeconomic adjustment was an integral part of Korea’s crisis resolution, particularly in its early stage. Immediately after the crisis, the most urgent task faced by the government was to restore currency stability as it was considered pivotal to investor confidence. In order to build up foreign reserves, which were almost depleted at the time of the crisis, Korea had to generate the large amount of external liquidity in addition to the rescue lo


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Title Post-crisis macroeconomic policies in Korea
Similar Titles
Material Type Reports
Author(English)

Kim, Jun Il

Publisher

[Seoul]:Korea Development Institute

Date 2001
Pages 14
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Holding Korea Development Institute