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A small-scale monetary policy model for Korea

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  • A small-scale monetary policy model for Korea
  • Piao, Ji Shi; Joo, Sangyong
  • The Association of Korean Economic Studies


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Title A small-scale monetary policy model for Korea
Similar Titles
Material Type Articles
Author(English)

Piao, Ji Shi; Joo, Sangyong

Publisher

[Seoul]:The Association of Korean Economic Studies

Date 2011-12
Journal Title; Vol./Issue Korea and the World Economy:vol. 12(no. 3)
Pages 27
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Holding AKES

Abstract

We analyze a small-scale new Keynesian open economy model to assess the BOK’s monetary policy during the post crisis period. The model is estimated by the Bayesian Markov Chain Monte Carlo (MCMC) method. The results are largely consistent with the predictions of the new Keynesian model. Most importantly, the forward looking behavior plays an important role in the IS curve as well as in the Phillips curve. The estimates on the real exchange rate in the model show signs consistent with the theory. The monetary feedback rule tells that inflation and output have been equally treated. The weight on the exchange rate is relatively small, but the exchange rate seems to be another important concern of the BOK. The impulse response analysis confirms that the BOK tries to offset the impact of exchange rate shocks in a moderate but persistent way. (The rest omitted)