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Investment-Specific Technology Shock in an International Real Business Cycle Model: The Korea Case

Author

Listed:
  • Jun Young Kim

    (Sungkyunkwan University)

  • Jai Hyung Yoon

    (POSCO Research Institute)

Abstract

This paper investigates an international real business cycle model of a small open economy such as Korea. Our model is parameterized, calibrated, and incorporates the neoclassical framework with investment-specific technology shock. Our result supports that shocks to the marginal efficiency of investment are important for business fluctuations. Our model is able to duplicate many of the stylized facts of business cycles in Korea. Our analyses suggest that capacity utilization and investment-specific technology shock, together with productivity and world real interest rate shocks, provide a meaningful explanation to Korea economic fluctuations. The shock has positive effects on macroeconomic variables except for trade balance.

Suggested Citation

  • Jun Young Kim & Jai Hyung Yoon, 2004. "Investment-Specific Technology Shock in an International Real Business Cycle Model: The Korea Case," Korean Economic Review, Korean Economic Association, vol. 20, pages 75-94.
    • Handle: RePEc:kea:keappr:ker-20040630-20-1-04
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    File URL: http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-20040630-20-1-04.pdf
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    Cited by:

    1. Yao Li & Yugang He & Renhong Wu, 2023. "Traversing the Macroeconomic Terrain: An Exploration of South Korea’s Economic Responsiveness to Cross-Border E-Commerce Production Technology Alterations in the Global Arena," Sustainability, MDPI, vol. 15(15), pages 1-20, July.

    More about this item

    Keywords

    International real business cycles; Capacity utilization; Investment- Specific technology shocks;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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