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Asian financial crisis and exchange rate pass-through in Korea

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  • Asian financial crisis and exchange rate pass-through in Korea
  • Lee, Minsoo
  • University of Minnesota


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Title Asian financial crisis and exchange rate pass-through in Korea
Similar Titles
Material Type Reports
Author(English)

Lee, Minsoo

Publisher

[St. Paul]:University of Minnesota

Date 2005-06
Journal Title; Vol./Issue Review of Applied Economics:Vol. 1(No. 1)
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Economy < Economic System
Holding University of Minnesota

Abstract

This paper empirically examines the asymmetric price setting behavior on exchange rate volatility from foreign firms of Korea’s major trading partners which causes an incomplete exchange rate pass-through into import prices in Korea. The study demonstrates that there exists a significant difference between the exchange rate passthrough to aggregate import prices in Korea during the post-Asian financial crisis period and its counterpart during the pre-crisis period. The results from time series data support that both short-term and long-term exchange rate pass-through elasticities to import prices in the Korean economy during the post-Asian financial crisis period are greater than those during the pre-crisis period. The pass-through can be endogenous to the monetary policy regime. For the case of Korea, pass-through rates into import prices at least during the post-crisis period are more a function of macroeconomic conditions and international markets than the domestic monetary policy.