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Household coping strategies and the financial crisis in Korea

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  • Household coping strategies and the financial crisis in Korea
  • Kang, Sung Jin; Sawada, Yasuyuki
  • The Association of Korea Economic Studies


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Title Household coping strategies and the financial crisis in Korea
Similar Titles
Material Type Proceedings
Author(English)

Kang, Sung Jin; Sawada, Yasuyuki

Publisher

[Seoul, South Korea]:The Association of Korea Economic Studies

Date 2002
Pages 34
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Holding Kar-yiu Wong website

Abstract

In order to examine how Korean households coped with the financial crisis, this paper employs household-level panel data during 1995-98 and estimates a switching regression model of an augmented consumption Euler equation with endogenous credit constraints. Several empirical findings emerge. First, the estimated result confirms our hypothesis that the main reason why Euler equation is found to be not holding is the credit constraints. Second, households coped with the negative shocks by reducing consumption of luxury items, while maintaining food, education, and health related expenditure. Third, for credit-constrained households, private transfers appeared to act as an ex post coping strategy during the crisis. Finally, we find public transfers to be an effective coping device for those who are credit-constrained before and during the crisis.

User Note

Paper prepared for a conference held by the Association of Korea Economic Studies.
Conference: July 21-22, 2002 "Korea and the World Economy," Seoul, Korea