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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. Seon Tae Kim, 2013. "Online Appendix to "The Price of Imports and TFP: Application to the Korean Crisis of 1997-98"," Technical Appendices, Review of Economic Dynamics 10-237, Review of Economic Dynamics.
  2. 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, Economics Division, School of Social Sciences, University of Southampton 0701, Economics Division, School of Social Sciences, University of Southampton.
  3. Dooyeon Cho & Antonio Doblas-Madrid, 2012. "Online Appendix to "Business Cycle Accounting East and West: Asian Finance and the Investment Wedge," Technical Appendices, Review of Economic Dynamics 10-51, Review of Economic Dynamics.
  4. Erwan Quintin & Sangeeta Pratap, 2009. "Financial Crises and Labor Market Turbulence," 2009 Meeting Papers, Society for Economic Dynamics 744, Society for Economic Dynamics.
  5. Horag Choi, 2013. "The Role of Establishment Heterogeneity in the Recovery from Sudden Stops," 2013 Meeting Papers, Society for Economic Dynamics 509, Society for Economic Dynamics.
  6. Ezra Oberfield, 2013. "Productivity and Misallocation During a Crisis: Evidence from the Chilean Crisis of 1982," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 100-119, January.
  7. Felipe Meza & David Benjamin, 2007. "Total Factor Productivity and Labor Reallocation: The Case of the Korean 1997 Crisis," 2007 Meeting Papers, Society for Economic Dynamics 157, Society for Economic Dynamics.
  8. Kang, Hyunju, 2013. "Behind the scenes of abandoning a fixed exchange rate regime," Journal of Banking & Finance, Elsevier, Elsevier, vol. 37(8), pages 3145-3156.
  9. 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.
  10. Felipe Schwartzman, 2010. "Time to produce and emerging market crises," Working Paper, Federal Reserve Bank of Richmond 10-15, Federal Reserve Bank of Richmond.
  11. Yamamoto, Shugo, 2013. "Sudden stop and trade balance reversal after Asian crisis: Investment drought impact versus exchange rate depreciation," Journal of Policy Modeling, Elsevier, Elsevier, vol. 35(5), pages 750-765.
  12. Arturo Antón Sarabia, 2007. "The Financial Accelerator from a Business Cycle Accounting Perspective," Working Papers, Banco de México 2007-06, Banco de México.

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