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Response of Domestic Production to Depreciation in Korea: an Application of Johansen's Conintegration Methodology

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  • Mohsen Bahmani-Oskooee
  • Hyun-Jae Rhee

Abstract

Theoretical and empirical studies concerned with the effects of devaluation on domestic production have generally concluded that while in industrial countries devaluation is expansionary, in developing nations it is contractionary. In this paper we consider the experience of Korea alone. After adopting a reduced form model from the literature, we employed Johansen's cointegration and error-correction technique and used quarterly data over 1971-94 to show that in Korea real depreciation of the Korean won is indeed expansionary. [F31, F41]

Suggested Citation

  • Mohsen Bahmani-Oskooee & Hyun-Jae Rhee, 1997. "Response of Domestic Production to Depreciation in Korea: an Application of Johansen's Conintegration Methodology," International Economic Journal, Taylor & Francis Journals, vol. 11(4), pages 103-112.
  • Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:103-112
    DOI: 10.1080/10168739700000029
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    Citations

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    Cited by:

    1. Munir A. S. Choudhary & Muhammad Aslam Chaudhry, 2007. "Effects of the Exchange Rate on Output and Price Level: Evidence from the Pakistani Economy," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(1), pages 49-77, Jan-Jun.
    2. Fouopi Djiogap Constant, 2012. "The CFA Franc Devaluation and Output Growth in the Franc Zone," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 3(1), pages 40-48, January.
    3. BAHMANI-OSKOOEE, Mohsen & Mohammadian, Amirhossein, 2017. "On the Relation between Domestic Output and Exchange Rate in 68 Countries: An Asymmetry Analysis," MPRA Paper 82939, University Library of Munich, Germany, revised 05 Apr 2017.
    4. M Bahmani-Oskooee & I Miteza, 2006. "Stock Market Growth: An analysis of cointegration and causality," Economic Issues Journal Articles, Economic Issues, vol. 11(1), pages 37-64, March.
    5. Francisco Garcia-Blanch, 2001. "An Empirical Inquiry into the Nature of South Korean Economic Growth," CID Working Papers 74A, Center for International Development at Harvard University.

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