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Monetary policy during and after the crisis in Korea

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Frame of Image nd Yoon-Ki Kim and Jong-Man Yoo for research assistance.
Foreword
It is common that interest rate policy draws a great deal of attention. However, there has been few cases that triggered such an intense debate as did the high interest rate policy carried out by the IMF and the Korean government right after the outbreak of currency crisis in 1997. This policy invited a tremendous degree of controversy among ordinary people as well as economists, both domestically and internationally. The IMF argued that the high interest rate policy was inevitable in order to stabilize perilous currency market, while others argued that this policy only raised the bankruptcy risks of highly leveraged Korean firms and destabilized the currency market. Since then, the interest rate has been lowered to a historic level, opening up the “super low interest rate era.” Just as there was hot debate about whether the interest rate was too high right after the currency crisis, there is now debate on whether the current interest rate is too low. Motivated by these debates, Dr. Dongchul Cho attempts to assess the post-crisis interest rate policy. More specifically, he raises two questions: (i) whether the high interest rate policy right after the outbreak of crisis was effective on exchange rate stabilization and (ii) whether the post-crisis interest rate policy can be justified in light of the optimal monetary policy rule framework. In order to answer the first question, he presents a theoretical framewor


Full Text
Title Monetary policy during and after the crisis in Korea
Similar Titles
Material Type Reports
Author(English)

Cho, Dongchul

Publisher

Korea Development Institute

Date 2002-10
Pages 33
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Economy < Economic Administration