본문으로 바로가기

Policy Analyses

Publications

To list
The Macroeconomic Effects of International Risks on Korean Economy in a Medium-term Perspective economic outlook, exchange rate

Author Dong-Eun Rhee, Young-Joon Park, and Eun Jung Kang Series 11-05 Language Korean Date 2011.12.30

Download(다운로드:1,415)

This study examines various potential international risk factors for the Korean economy in a medium-term perspective. The report highlights the different characteristics of the risk factors between the 1990s and 2000s in particular. First of all, the effects of oil price shocks on the Korean macroeconomy are investigated. Since Korea is an oil-importing country, it is natural that an oil price hike increases imports. However, VAR analysis found that an oil price rise raises exports as well as imports, since Korea imports crude oil and exports petroleum products. An export increase after the oil price shock was not observed in 1990s, since the ratio of petroleum product exports to total exports was relatively low in the 1990s but it has been increased in 2000s. Due to the fact that an oil price rise increases the exports, we also found that an oil price rise increases Korean industrial production in the short-run. Considering the asymmetry of the oil price shocks, the analysis shows that an oil price fall also increases industrial production, and moreover the impact is greater than in the case of an oil price rise.
Second, we empirically investigate the effects of exchange rates on Korean trade. It is widely believed that exchange rate depreciation would promote exports and reduce imports. However, we cannot find the evidence that the depreciation of exchange rates does boost exports, while it is found that depreciation decreases imports. Moreover, it is found that the volatility of exchange rates deters exports after the Asian currency crisis. Therefore, the stabilization of the foreign-exchange market is important for Korea to promote exports.
Third, the effects of the Chinese economy on the Korean economy are investigated empirically, focusing on exports and price levels. An empirical analysis found that the appreciation of the Chinese Yuan promotes Korean exports to China, by enhancing the price competitiveness of Korean products. Chinese exchange rate appreciation raises all three kinds of Korean exports: final goods, intermediate goods, and capital goods; while the impact of the final goods is the biggest among overall. It has also found evidence that Chinese inflation can be transmitted to Korea through rises in Korean import prices. Empirical analysis reveals that Chinese inflation had no significant impact on Korea’s inflation rate in the 1990s, while it became one of the main external causes of Korea’s inflation along with oil prices in the 2000s.
Lastly, we analyse the potential regional risk factors which can be realized in the medium-term. We considered the deterioration of the Eurozone fiscal crisis, US double-dip, and Chinese hard-landing as the risk factors. If the Eurozone sovereign debt crisis results in the disorderly defaults of some member countries, the world’s economy may experience recession like the global financial crisis of 2008. In the worst scenario of the Eurozone crisis, the world’s GDP will fall to 0.7%p in 2012 and 2.0%p in 2013. With regard to the US economy, it is not very probable that it faces a double-dip in 2012, but the recovery process from the subprime mortgage crisis could be longer than expected. If a US double-dip is realized in 2012, the world’s GDP may fall to 0.9%p in 2012 and 0.5%p in 2013. Finally, China’s hard-handing scenario does not seem to be happening in the near future. However, it is needed to carefully monitor the China’s bubble problem of asset markets and banking sector stability. If China’s hard-landing scenario becomes realized in 2012, the world’s GDP may fall to 0.4%p in 2012 and 0.9%p in 2013.

Sales Info

Quantity/Size, Sale Price
Quantity/Size 136
Sale Price $

Order List

공공누리 OPEN / 공공저작물 자유이용허락 - 출처표시, 상업용금지, 변경금지 공공저작물 자유이용허락 표시기준 (공공누리, KOGL) 제4유형

대외경제정책연구원의 본 공공저작물은 "공공누리 제4유형 : 출처표시 + 상업적 금지 + 변경금지” 조건에 따라 이용할 수 있습니다. 저작권정책 참조