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A Neoclassical Analysis of The Korean Crisis

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  • Keisuke Otsu

    (Bank of Japan)

Abstract

In late 1997, Korea experienced a huge and unusual economic crisis. The three main features of this crisis are the sudden recession, the rapid recovery and a consumption drop as large as the output drop. A large body of literature qualitatively explains the Korean crisis in terms of financial and monetary variables such as exchange rates and interest rates. This paper complements these studies by quantitatively analyzing fluctuations in real macroeconomic variables such as real GDP and consumption. A stochastic small open economy neoclassical model can quantitatively account for the Korean crisis taking TFP and real interest rates as exogenous. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2007.08.002
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 11 (2008)
Issue (Month): 2 (April)
Pages: 449-471

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Handle: RePEc:red:issued:06-208

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Related research

Keywords: Korean crisis; Small open economy; TFP; Financial crisis;

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References

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Citations

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Cited by:
  1. Sangeeta Pratap & Erwan Quintin, 2010. "Financial Crises and Labor Market Turbulence," Economics Working Paper Archive at Hunter College 428, Hunter College Department of Economics.
  2. Kang, Hyunju, 2013. "Behind the scenes of abandoning a fixed exchange rate regime," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 3145-3156.
  3. Benjamin, David M. & Meza, Felipe, 2007. "Total factor productivity and labor reallocation: the case of the 1997 Korea crisis," Discussion Paper Series In Economics And Econometrics 0701, Economics Division, School of Social Sciences, University of Southampton.
  4. Felipe Schwartzman, 2010. "Time to produce and emerging market crises," Working Paper 10-15, Federal Reserve Bank of Richmond.
  5. Yamamoto, Shugo, 2013. "Sudden stop and trade balance reversal after Asian crisis: Investment drought impact versus exchange rate depreciation," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 750-765.
  6. Ezra Oberfield, 2012. "Online Appendix to "Productivity and Misallocation During a Crisis: Evidence from the Chilean Crisis of 1982"," Technical Appendices 11-215, Review of Economic Dynamics.
  7. Seon Tae Kim, 2014. "The Price of Imports and TFP: Application to the Korean Crisis of 1997-98," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(1), pages 39-51, January.
  8. Dooyeon Cho & Antonio Doblas-Madrid, 2012. "Online Appendix to "Business Cycle Accounting East and West: Asian Finance and the Investment Wedge," Technical Appendices 10-51, Review of Economic Dynamics.
  9. Arturo Antón Sarabia, 2007. "The Financial Accelerator from a Business Cycle Accounting Perspective," Working Papers 2007-06, Banco de México.
  10. Horag Choi, 2013. "The Role of Establishment Heterogeneity in the Recovery from Sudden Stops," 2013 Meeting Papers 509, Society for Economic Dynamics.
  11. Hsu, Minchung & Zhao, Min, 2009. "China’s Business Cycles between 1954 – 2004: Productivity and Fiscal Policy Changes," MPRA Paper 21283, University Library of Munich, Germany.
  12. Felipe Meza & David Benjamin, 2007. "Total Factor Productivity and Labor Reallocation: The Case of the Korean 1997 Crisis," 2007 Meeting Papers 157, Society for Economic Dynamics.

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