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What does South Korean inflation targeting target?

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  • Sánchez, Marcelo
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    Abstract

    This paper characterises South Korean monetary policy in the period of explicit inflation targeting that started in 1999. We calculate Bank of Korea's parameters in the policy objective function, conditional on an estimated macro-model. We show that this central bank appears to have pursued optimal policy geared towards achieving price stability, while displaying a considerable degree of interest rate smoothing. In addition, the central bank loss function is estimated to include negligible weights on output and exchange-rate variability.

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    File URL: http://www.sciencedirect.com/science/article/B6W53-50J4MDG-1/2/4111fa136bb013458d160f8f6e858e0a
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Asian Economics.

    Volume (Year): 21 (2010)
    Issue (Month): 6 (December)
    Pages: 526-539

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    Handle: RePEc:eee:asieco:v:21:y:2010:i:6:p:526-539

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    Web page: http://www.elsevier.com/locate/asieco

    Related research

    Keywords: Inflation targeting Optimal monetary policy Emerging market economies South Korea;

    References

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    Cited by:
    1. Hamilton-Hart, Natasha, 2011. "Distribution, Domestic Politics and Monetary Cooperation in East Asia," ADBI Working Papers 332, Asian Development Bank Institute.
    2. Pierre-Richard Agénor & Luiz A. Pereira da Silva, 2013. "Inflation Targeting and Financial Stability: A Perspective from the Developing World," Working Papers Series 324, Central Bank of Brazil, Research Department.

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