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Stagflationary effects of monetary stabilization policies : A quantitative analysis of South Korea

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  • Stagflationary effects of monetary stabilization policies
  • Wijnbergen, S. Van
  • Elsevier


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Title Stagflationary effects of monetary stabilization policies
Similar Titles
Sub Title

A quantitative analysis of South Korea

Material Type Articles
Author(English)

Wijnbergen, S. Van

Publisher

[Amsterdam, Netherlands]:Elsevier

Date 1982
Journal Title; Vol./Issue Journal of Development Economics:vol. 10
Pages 41
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Macroeconomics
Holding Research Gate

Abstract

We present a quarterly macroeconomic model of South Korea that explicitly incorporates stylized facts about Korea's financial structure (absence of primary securities markets, existence of a curbmarket for credit, etc.). The model focuses on the linkage between financial and real sectors and explicitly incorporates the transmission channel of monetary policy into the supply side of the economy via the real costs of working capital ('Cavallo-effect'). The econornetric evidence presented here shows the relevance of this effect. Simulation runs with the model based on the estimated parameter values show strong stagflationary effects of restrictive monetary policy in the short run because of this transmission channel.