Implications of Global Recession and Structural Changes for Korean Economy

The main contributions of this monograph are to quantitatively analyze the effects of aging population, rising income inequality, China's 13th Five-Year Plan, and Brexit. To do that, we use the Oxford Economics Global Model Workstation and the model developed by Eaton, Kortum, Neiman, and Romalis (2016). Our quantitative results suggest four primary lessons. First, the domestic demand channel is as important as net export channels. Second, the policy to address aging through raising the fertility rate should take into account trade-off between current employment and investment and the number of future working-aged population. Third, the policy to address inequality should be grounded by further information on the whole income distribution, instead of targeting a single index for inequality. Finally, even though trade protectionism has negative consequences on the global economy, the gain from trade liberalization may not be bilateral between trading countries, depending on various characteristics of the countries.