This paper estimates a new open economy macroeconomic model for South Korea to determine the output effect of currency devaluations. Three transmission mechanisms are considered: the expenditure-switching, the balance sheet, and a monetary channel associated to a nominal exchange rate target. Devaluations are defined as an increase in this target. This allows to isolate the effects of an explicit exogenous devaluationary policy shock. Ceteris paribus, a devaluation is found to be expansionary. Output contractions in South Korea should then be associated with a different shock such as an adverse shock on the international interest rate or on export demand.
|Keywords:||Koreja, ekonomska politika, monetarna politika, valuta, devalvacija, bilanca stanja, inflacija, obrestna mera, makroekonomija, ekonometrija, analiza, Korea, economic policy, monetary policy, currency, devaluation, balance sheet, inflation, interest rate, macroeconomics, econometrics, analysis|
|Work type:||Not categorized (r6)|
|Organization:||EF - Faculty of Economics|
|Publisher:||Bank for International Settlements|
|Number of pages:||41 str.|
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