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What does South Korean inflation targeting target?

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  • Sánchez, Marcelo

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.

Suggested Citation

  • Sánchez, Marcelo, 2010. "What does South Korean inflation targeting target?," Journal of Asian Economics, Elsevier, vol. 21(6), pages 526-539, December.
  • Handle: RePEc:eee:asieco:v:21:y:2010:i:6:p:526-539
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Hamilton-Hart, Natasha, 2011. "Distribution, Domestic Politics and Monetary Cooperation in East Asia," ADBI Working Papers 332, Asian Development Bank Institute.

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