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Controlling inflation : Korea's recent experience

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  • Controlling inflation
  • Corbo, Vittorio; Nam, Sang Woo
  • The World Bank


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Title Controlling inflation
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Sub Title

Korea's recent experience

Material Type Reports
Author(English)

Corbo, Vittorio; Nam, Sang Woo

Publisher

Washington D.C. : The World Bank

Date 1986-10
Series Title; No Departmental Working Paper / DRD207
Pages 39
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Economy < Economic Administration
Economy < Economic System
Holding The World Bank
License

Abstract

This paper analyzes the successful stabilization of the Korean economy. In particular, we examine the main variables that have contributed to the deceleration of inflation. For this purpose, we formulate and estimate, a small quarterly econometric model of inflation in a semi-open economy. The estimated model is then used to perform counterfactual simulations to ascertain the contribution to the deceleration of inflation of (a) the collapse in international commodity prices; (b) the slowdown in the real price of agricultural goods; and (c) less expansionary fiscal and monetary policies. We conclude that successful control of inflation resulted from the slowdown in the price of imported materials that followed the collapse of international commodity markets; the slowdown in agricultural prices after 1980, a disastrous year for Korea's agriculture, and moderate aggregate demand policies that resulted in moderate adjustment in the nominal effective exchange rates without loss of international competitiveness.