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Monetary policy towards inclusive growth : The case of Korea

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  • Monetary policy towards inclusive growth
  • Chang, Dongkoo; Jaffar, Jami’ah
  • The South East Asian Central Banks (SEACEN) Research and Training Centre


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Title Monetary policy towards inclusive growth
Similar Titles
Sub Title

The case of Korea

Material Type Report
Author(English)

Chang, Dongkoo; Jaffar, Jami’ah

Publisher

Kuala Lumpur, Malaysia : The South East Asian Central Banks (SEACEN) Research and Training Centre

Date 2014-06
Series Title; No Working paper / 5/2014
Pages 39
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Social Development < Employment
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Abstract

This paper investigates the impact of interest rate policy on employment using Korean data (1982.1/4~2012.4/4). Based on the analyses of impulse response functions, it was found that interest rate policy has a bigger impact on the cyclical component of employment than on total employment. The shrinking effect of employment by a hike in interest rate is estimated to be larger in contrast to the expanding effect of employment as a result of declining interest rate. Interestingly, most of the effect of interest rate on employment is realized through wage workers and manufacturing sector employment rather than non-wage workers or service sector employment. In this regard, in order to expand total employment and keep it at a desire level, to enable inclusive growth, it is essential to reduce the volatility of the policy rate and maintain interest rate at a long-term neutral level for a prolonged period and to reduce exchange rate volatility created by changes in interest rate. (The rest omitted)