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Dynamics of Business Cycles in Korea: The Role of External Shocks
- Source :
- KDI Journal of Economic Policy, Vol 27, Iss 1, Pp 157-183 (2005)
- Publication Year :
- 2005
- Publisher :
- Korea Development Institute, 2005.
-
Abstract
- Using a multi-sector dynamic stochastic general equilibrium model, we investigate the dynamic effects of a variety of shocks to a small open economy. In particular, we calibrate the model to match the main characteristics of business cycles in Korea and analyze the effects of external shocks: the terms of trade and world real interest rate shocks. Business cycles in Korea more closely follow those of the G7 countries rather than Asian countries. The simulation results suggest that an improvement in the terms of trade has positive impact on investment, output and consumption, while a decrease in the world interest rate has a significant and positive effect on investment. This paper concludes that external shocks significantly influence business cycle fluctuations in Korea.
Details
- Language :
- English, Korean
- ISSN :
- 25862995 and 25864130
- Volume :
- 27
- Issue :
- 1
- Database :
- Directory of Open Access Journals
- Journal :
- KDI Journal of Economic Policy
- Publication Type :
- Academic Journal
- Accession number :
- edsdoj.79f6103c34ad4038a1147391a08d2a1a
- Document Type :
- article
- Full Text :
- https://doi.org/10.23895/kdijep.2005.27.1.157