Policy Analyses
RESEARCH
Policy Analyses
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Transport Costs, Relative Prices, and International Risk Sharing
This paper studies the role of the transport costs in accounting for the puzzling behaviors of relative prices and risk sharing across countries. We show that introducing the transport costs in an otherwise standard competitive mo..
Inkoo Lee et al. Date 2009.12.30
Financial Integration, Capital MarketDownloadContentⅠ. Introduction
Ⅱ. Purchasing Power Parity Puzzle
Ⅲ. International Risk Sharing Puzzle
Ⅳ. Transport Costs
Ⅴ. The Model
Ⅵ. Results
Ⅶ. Conclusions
ReferencesSummaryThis paper studies the role of the transport costs in accounting for the puzzling behaviors of relative prices and risk sharing across countries. We show that introducing the transport costs in an otherwise standard competitive model improves its ability to rationalize the deviations from the law of one price and imperfect international risk sharing. Our analysis suggests that the purchasing power parity puzzle and the consumption correlation puzzle can naturally arise in the presence of real frictions, even under the assumption of complete financial markets.
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Impacts of Free Trade Agreements on Structural Adjustment in the OECD: Panel Data Analysis
This paper examines the effects of FTAs such as the EU, the NAFTA, and the CER on production, employment, and industrial structure in the OECD. Specifically, this study implements the following two-stage approach. First, it applie..
Nakgyoon Choi Date 2009.12.30
Economic Integration, Industrial PolicyDownloadContentI. Introduction
II. Basic Equation and Database
Ⅲ. Applying Unbalanced Nested Error Components Model to the Pooled Data
Ⅳ. Effects of FTAs on Structural Adjustment by Industries
Ⅴ. Conclusion and Policy Implications
References
Appendix
SummaryThis paper examines the effects of FTAs such as the EU, the NAFTA, and the CER on production, employment, and industrial structure in the OECD. Specifically, this study implements the following two-stage approach. First, it applies an unbalanced nested error components model to the pooled data for the full 30 country, 16 industry, and 24 year sample. Second, it implements both one-way and two-way error component regression models to handle fixed effects and random effects along with country-specific and time-specific characteristics. This paper demonstrates that the coefficient on FTAs is statistically significant and positive, when we apply the nested error components model to the pooled data on the full 16 industries in the OECD, meaning that FTAs tend to enhance production and employment structures. When we analyze the country-specific and time-specific effects using the fixed effects model as well as the random effects model for the six industries, the coefficient on FTAs turned out to have different signs depending on the industry. The FTAs tend to increase the production share of agriculture, metal, and transport industries, while having opposite effects in the case of food, textile, and business services industries. On the other hand, the FTAs tend to increase the employment share of metal and transport industries, but decrease that of agriculture, food, textile, and business services industries. -
Effects of Foreign Investment on Korean Bond and Derivatives' Market
Foreign investment in Korea's financial market attracted attention mainly due to its impact on price and volatility. This study analyzes the impact of foreign investment in bonds and derivatives market in Korea, even though foreig..
Deok Ryong Yoon et al. Date 2009.12.30
Financial Liberalization, Financial SystemDownloadContentSummaryForeign investment in Korea's financial market attracted attention mainly due to its impact on price and volatility. This study analyzes the impact of foreign investment in bonds and derivatives market in Korea, even though foreigners do not have strong impact on these markets.(The rest is omitted) -
Macroeconomic Structure for the Stable Economic Growth in Korea
Korea is an example of a country that has maintained a policy of export-oriented growth. Due to the small domestic market size and relative low level of GDP per capita, Korea cannot still reduce its reliance on exports. The financ..
Deok Ryong Yoon et al. Date 2009.12.30
Economic Opening, Economic IntegrationDownloadContentSummaryKorea is an example of a country that has maintained a policy of export-oriented growth. Due to the small domestic market size and relative low level of GDP per capita, Korea cannot still reduce its reliance on exports. The financial sector has also become increasingly dependent on foreign capital since the currency crisis in 1997, because the country has removed almost all barriers against external investment. A relatively high level of trade dependency as well as the growing weight of foreign capital in the domestic financial markets caused a concern that the external sector would become more important than the domestic sector. Global financial and economic crisis last year reignited discussions on the appropriate level of Korea's external dependency. In this book, we examine issues and problems related to high external dependency or linkage in various ways. Based on the results of our empirical and analytical observations, we also suggest policy recommendations which may bolster stable economic growth in Korea.(The rest is omitted) -
From ASEAN+1 FTAs to an East Asia FTA
Although East Asian Countries belatedly joined the worldwide regionalism, they concluded many bilateral and plurilateral FTAs within a relatively short period of time. A number of FTAs were concluded among East Asian countries.In ..
Chang Jae Lee et al. Date 2009.12.30
Economic Integration, Free TradeDownloadContentSummaryAlthough East Asian Countries belatedly joined the worldwide regionalism, they concluded many bilateral and plurilateral FTAs within a relatively short period of time. A number of FTAs were concluded among East Asian countries.
In addition to the 'Spaghetti bowl phenomenon' that resulted from the proliferation of FTAs among East Asian countries, recently, the global financial and economic crisis prompted East Asian countries to consider seriously an East Asia FTA (EAFTA). In fact, since the United States and the European Union are not expected to continue absorbing exports from East Asian countries in the coming years, there is a growing need for expanding the intra-regional market, and an EAFTA.(The rest is omitted) -
OECD DAC Guidelines and Implications for Korea's ODA Policy
On 25 November 2009, Korea became the 24th newest member of the OECD Development Assistance Committee (DAC). The DAC is a unique international forum where donor governments and multilateral organizations come together to help part..
Yul Kwon et al. Date 2009.12.30
Economic Development, Economic CooperationDownloadContentSummaryOn 25 November 2009, Korea became the 24th newest member of the OECD Development Assistance Committee (DAC). The DAC is a unique international forum where donor governments and multilateral organizations come together to help partner countries reduce poverty and achieve the Millennium Development Goals. As a member of the DAC, Korea needs to upgrade its development assistance system and follow international guidelines on development.(The rest is omitted) -
Mesuring the Barriers for Service Trade and Its Policy Implications
The purpose of this research is measuring barriers for the service trade on telecommunications, constructions, and professional service sectors in seven OECD countries including Korea and suggesting policy implications by estimati..
Hankyoung Sung et al. Date 2009.12.30
Trade Policy, Free TradeDownloadContentSummaryThe purpose of this research is measuring barriers for the service trade on telecommunications, constructions, and professional service sectors in seven OECD countries including Korea and suggesting policy implications by estimating economic effects when those are eliminated.
In the second chapter, we study the characteristics and trade flows of the three service sectors. Telecommunication services, which used to provided by state-owned enterprises (SOEs), is considered regulations would be necessary to keep the market competitive. The construction services may be restricted by several regulations since mostly those need to be provided by commercial presence. Professional services that include legal, accounting, architecture, and engineering was highly regulated but the discussions on its opening and facilitating competition is widely in process. (The rest is omitted) -
Development Strategies for Korean IT Services in the Era of Globalization
Creation of many high quality jobs is very important for the domestic economy, in order to secure a new engine of growth and to reduce polarization. Knowledge-based services, and business services in particular, are attracting muc..
Yeongkwan Song et al. Date 2009.12.30
Economic Development, Industrial PolicyDownloadContentSummaryCreation of many high quality jobs is very important for the domestic economy, in order to secure a new engine of growth and to reduce polarization. Knowledge-based services, and business services in particular, are attracting much attention in this regard. Business services develops as other sectors of the economy, such as manufacturing, progress into a higher level. In developed countries, business services have developed naturally in line with their economic progress. The development of business services in turn raised the efficiency of companies, creating a virtuous circle.(The rest is omitted) -
Economic Impact of an FTAAP: Implication and Significance for Korean Economy
Since its inception in 1989, Asia-Pacific Economic Cooperation (APEC) has long been strived to evolve the vision of building the Asia-Pacific economic community into the stage of maturity under the principle of 'open regionalism.'..
Sangkyom Kim et al. Date 2009.12.30
Economic Integration, Economic CooperationDownloadContentSummarySince its inception in 1989, Asia-Pacific Economic Cooperation (APEC) has long been strived to evolve the vision of building the Asia-Pacific economic community into the stage of maturity under the principle of 'open regionalism.' However, with its 20th anniversary, APEC appears to be adrift in the middle of formidable challenges demanding major changes and reforms. Among others, challenges posed by its unique feature, represented by dynamism and diversity, is worth to note for further deliberation. While the growing interdependence in our region by economic dynamism heightened the need for the APEC to strengthen regional economic integration its diversity which in effect produces the heterogeneity of economic interests and political stances makes it very difficult to construct a proper architecture for the region as a whole.(The rest is omitted) -
Effective Implementation of Korea-ASEAN FTA: Trade in Goods
Interest of government, the media, and the academic world for concluding FTA tends to focus on how broad the openness of markets would be, or how fast tariff elimination or reduction could be achieved. It is a clear fact that the ..
HanSung Kim et al. Date 2009.12.30
Trade Policy, Free TradeDownloadContentSummaryInterest of government, the media, and the academic world for concluding FTA tends to focus on how broad the openness of markets would be, or how fast tariff elimination or reduction could be achieved. It is a clear fact that the breadth and depth of market opening is a staple issue for each participant, yet to recognize how to utilize a concluded FTA efficiently is a question as significant as to concluding FTA. (The rest is omitted)