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Monetary policy in Korea through the lens of Taylor rule in DSGE model
- Monetary policy in Korea through the lens of Taylor rule in DSGE model
- Kim, Tae Bong
- Stonybrook University
| Title |
Monetary policy in Korea through the lens of Taylor rule in DSGE model
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| Material Type | Report |
| Author(English) |
Kim, Tae Bong |
| Publisher |
[Stonybrook] : Stonybrook University |
| Date | 2013-02 |
| Series Title; No | 2013 Meeting Papers / 746 |
| Subject Country | South Korea(Asia and Pacific) |
| Language | English |
| File Type | Link |
| Subject | Economy < Economic Conditions Economy < Economic Administration |
| Holding | Stonybrook University |
| License |  |
Abstract
This paper shows assessments on the monetary policy of Korea based on an estimated model. During the sample period of the inflation targeting scheme, the monetary policy discretion, which is the monetary policy shock after the historical decomposition of the model, has been mostly inflationary while it was reducing the volatility of output growth and thus countercyclical. 3% target rate could have been achieved when the monetary policy shock’s standard deviation was approximately half of its posterior estimate. Various degree of monetary policy stance has been simulated with the sample period. An aggressive monetary policy towards inflation stabilization would have generally led to the average level of inflation rate closer to its target rate but at the cost of higher volatilities of the output growth.
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