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Economy Economic Conditions

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Monetary stabilization policy during economic crisis : Case of Korea

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  • Monetary stabilization policy during economic crisis
  • Chung, Chae Shick; Kim, Se Jik
  • The Korean Economic Association


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Title Monetary stabilization policy during economic crisis
Similar Titles
Sub Title

Case of Korea

Material Type Reports
Author(English)

Chung, Chae Shick; Kim, Se Jik

Publisher

[Seoul] : The Korean Economic Association

Date 2004
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Holding The Korean Economic Association
License

Abstract

The paper evaluates the effectiveness of high interest rate policy in stabilizing the exchange rate during the Korean crisis, based on a nonlinear impulse response function approach. We find that high interest rates induce depreciation for a very short period, followed by a substantial appreciation for an extensive period In contrast, a low interest rate policy would appreciate the exchange rate only for a very short period but have little impact afterwards. Our empirical findings suggest that the IMF's interest rate policy in Korea contributed to the stabilization of the exchange rate.