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Working Paper
Foreign exchange policy, monetary policy, and capital market liberalization in Korea
In this paper, I investigate the interactions between foreign exchange policy, monetary policy, and developments in Korean capital markets. A large increase in Korea's external position, combined with a relatively inflexible exchange rate, led to very large potential increases in money growth between 1986 and 1989. The sterilization of the foreign exchange intervention required an unprecedented monetary tightening on other fronts--a tightening that could have created serious distortions in the financial markets had direct credit controls been utilized. Consequently, the use of open market ...
Working Paper
A monetary policy feedback rule in Korea's fast-growing economy
In Korea's high-growth economy, the Bank of Korea had been willing to tolerate double-digit inflation, provided that it remained at "non-explosive" levels. In this article, we estimate a monetary policy feedback rule for Korea and find that the upper threshold of tolerable inflation for the Bank of Korea was about 20 percent. It appears that the Bank of Korea's disciplined, rule-like approach to monetary policy was able to control inflation and keep it away from explosive levels, despite the well-know empirical regularity that inflation becomes more variable at higher levels. After 1983, ...
Conference Paper
Foreign exchange rate regime and policy in Korea, 1980-1992
Working Paper
Monetary policy in a changing financial environment: searching for an efficient monetary policy framework in Korea
This paper reviews how the changing financial environment in Korea has affected the conduct of monetary policy and examines the extent to which the Bank of Korea now uses the short-term interest rate rather than money aggregates as an operating target. Empirical results from estimation of monetary reaction functions suggest that the Bank of Korea has been following an interest rate target recently, even though it has not explicitly admitted to doing so. The paper also discusses how the conduct of monetary policy can be further enhanced by reforming the call money market and developing the ...
Conference Paper
Monetary policy and financial reform in Korea