IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v92y2025i2p359-381.html
   My bibliography  Save this article

Economic policy uncertainty and the Kimchi premium in the cryptocurrency market

Author

Listed:
  • Dooyeon Cho
  • Kyung‐woo Lee

Abstract

We construct a new daily measure of uncertainty about economic policy for Korea. The economic policy uncertainty (EPU) index is extracted from the reporting about economic policy in major Korean newspapers. We then investigate how daily EPU affects the Kimchi premium, which is the ratio of the Bitcoin price in Korea to that in the United States, adjusted for the exchange rate. Our findings indicate that an increase in Korea's EPU makes Bitcoin more expensive in Korea, while the U.S. dollar strengthens against the Korean won. The stronger appreciation of the U.S. dollar outweighs the increase in Bitcoin prices, thereby lowering the Kimchi premium. Similarly, an increase in U.S. EPU has comparable but weaker effects. The appreciation of the U.S. dollar almost entirely offsets the higher relative price of Bitcoin in Korea, resulting in no significant impact on the Kimchi premium from changes in U.S. EPU. In addition, the results suggest that the Kimchi premium tends to rise with increased trading volume in Korea but decreases as trading volume increases in the United States. We also document that while the Kimchi premium is positively associated with Bitcoin price volatility in Korea, it is not significantly related to that in the United States.

Suggested Citation

  • Dooyeon Cho & Kyung‐woo Lee, 2025. "Economic policy uncertainty and the Kimchi premium in the cryptocurrency market," Southern Economic Journal, John Wiley & Sons, vol. 92(2), pages 359-381, October.
    • Handle: RePEc:wly:soecon:v:92:y:2025:i:2:p:359-381
    DOI: 10.1002/soej.12750
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/soej.12750
    Download Restriction: no
    File URL: https://libkey.io/10.1002/soej.12750?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:92:y:2025:i:2:p:359-381. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.