• Journal of Labour Economics
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• v.42 no.2
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• pp.1-35
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• 2019

This paper compares the effects of income transfer and wage subsidy in a simple general equilibrium model. The redistributive effects of both policies are smaller, the more intensive in low wage workers are the luxury goods production. Wage subsidy contributes more to employment and GDP relative to income subsidy, but its redistributive effects can be smaller depending on the elasticities of labor demand supply. More complete empirical analysis appears due on the effects of both policies in order to design an optimal mix of efficiency and equity.

• KDI Journal of Economic Policy
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• v.34 no.4
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• pp.69-90
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• 2012

This paper explores the effect of the countercyclical capital buffer using a DSGE (Dynamic Stochastic General Equilibrium) model with a banking sector. The main results are following. First, if the CAR (capital asset ratio) rises by 1%p as the countercyclical capital buffer, output and credit would increase less than otherwise by 0.8%p and 1.2%p, respectively. Second, the countercyclical capital buffer would decrease both credit and debt of banks, or deposit, and, as a result, boost the CAR. However, if we are going to use monetary policy to control credit expansion by allowing the interest rate to respond to credit, bank capital would also diminish, which would cause the CAR to be lower.

• Environmental and Resource Economics Review
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• v.31 no.3
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• pp.367-391
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• 2022

We develop an energy-economy Bayesian DSGE model with the two sectors of electricity generations-traditional (fossil, nuclear) and renewable energy. Under imperfect substitutability between the two sectors, a technological shock on renewable energy sectors does not sufficient to facilitate energy conversion and reduce greenhouse gas emissions. Technology innovation on greenhouse gas emission reduction is also required. More importantly, sufficient investment should be derived by a well-functioning electricity market where electricity price plays a signal role in efficient allocation of resources. Indeed, market rigidities cause reduced consumption.

• Environmental and Resource Economics Review
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• v.12 no.3
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• pp.397-425
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• 2003

This paper develops a simple theoretical model that is consistent with the empirical evidence of an inverted U-shpated relationship between pollution and per capita income, which is so-called environmental Kuznets curve in this literature. Also, by incorporating the issue of environmental externality into an endogenous growth model, I investigate the circumstances under which growth can be sustained with the optimal control of pollution, and hence the sustainable development can be achieved. In order to study the problem of implementing the social optimum in a market economy, I examine the optimality of three different kinds of environmental policy instruments; pollution tax, pollution-permit trading system (pollution voucher), and direct regulation. This paper shows that the optimum can be implemented with a pollution tax or with a voucher system. Also, it is shown that the socially optimal rate of pollution tax should increase proportionally to the growth rate of consumption.

• Environmental and Resource Economics Review
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• v.18 no.1
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• pp.23-51
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• 2009

This research alms at quantifying economic impacts of free trading policy on environment-friendly fuel industry applying a static general equilibrium (CGE) model for Korea. Theoretically, 'polluters haven' hypothesis had been debated as major issue on the environmental effects of trade liberalization during 1970s and 1980s but recent literature emphasizes that production, scale, structural, and regulatory effects may derive rapid diffusion of environment friendly technologies. In this study, trade liberalization policy affects output of agricultural sectors negatively while that of biodiesel as environment-friendly technology positively. The rise m the output of biodiesel is derived from the reduction in import prices of agricultural products due to the abolishment of tariff. The policy implication from the analysis is that feedstock for producing biodiesel should be exploited in the foreign countries where productivity of agriculture is quite predominant compared to Korean agriculture.

• Environmental and Resource Economics Review
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• v.27 no.1
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• pp.29-66
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• 2018

This study constructs an energy-extended KLEM DB of 35 Korean industries, and estimates the elasticities of substitution under various nesting structures of production technologies. Unlike most existing studies that employed only three inputs, K, L, and E, we applied a dual approach where non-energy intermediate input M is also incorporated as a production input. Our dual approach which extended that of van der Werf (2008)'s 3-input model successfully identified and estimated the multi-nested production functions. We provide the estimates of the elasticities of substitution among 4 different energy sources as well. Our estimation results would be used for energy-environment model building for Korea.

• Environmental and Resource Economics Review
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• v.19 no.4
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• pp.805-828
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• 2010

Korea also plans to introduce Renewable Portfolio Standard (RPS) for strengthening market functions after 2012 as United States and several members of EU countries did. Through the introduction of RPS, it requires energy industry to supply new and renewable energy at fixed rate. Therefore, it will contribute to the distribution of new and renewable energy. This paper analyzed the economic effect of the introduction of RPS using CGE. The summary of the paper on the analysis of the economic effect based on endogenous growth theory under imperfect market competition by using CGE is as follows; Since RPS possibly regulates the amount of new and renewable energy, it can achieve the target amount of new and renewable energy without fail. As achieving the target amount accurately, the distribution of more advanced skills can be expected. However, GDP reduction can occur because investment cost increases due to the requirement of new and renewable energy supply. Therefore, in the long run, it is appropriate to introduce RPS because it contributes to the distribution of new and renewable energy and can be utilized as a new growth engine to encourage economic growth.

• International Commerce and Information Review
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• v.14 no.1
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• pp.141-170
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• 2012

There are a couple of methods to analyze the trade effect of FTA. Some compare bilateral trade amounts, partner's share in total export, or market share in partner's total import. Others set up partial equilibrium models or general equilibrium models for more sophisticated analyses. The purpose of this paper is to analyze bilateral trade between Korea and Chile, Singapore, Switzerland and Norway using the Intensity of Trade and Special Country Bias. The Trade Intensity Analysis focuses on how much the real trade diverges from the expected one which is derived by the Gravity Model, and it enable us to define how much the bilateral trade is closely related with each other compared with the rest of the world. Also by excluding the effects of changes in Trade Complementarity, it enables us to evaluate the trade effect of FTA. The results show that regarding Korea's export, the biggest trade effects are found with Norway, and the effects are evading after a couple of years of outstanding accomplishment with Chile and Singapore. With Switzerland, however, almost no effect is found. Regarding Korea's import, Norway has recorded the biggest advance into Korean market, whereas, other countries do not show significant changes.

• The Korean Journal of Financial Management
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• v.25 no.3
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• pp.33-78
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• 2008

This paper empirically examines whether firms engage in a dynamic adjustment process toward target capital structure and, whether there is a target capital structure or mean reverting using the partial adjustment model while allowing for costly adjustment. Also we investigate the empirical determinants of optimal target capital structure in long term equilibrium. As a result, our empirical model captures at least several important features of capital structure behavior for Korean listed firms. First, Korean firms pursue target capital structure and also there is mean reverting phenomenon. Second, Non-Chaebol and small firm in adjustment speed is faster than Chaebol and large firm. Third, even capital market restricts the adjustment speed interestingly. Fourth, Korean firms have target behavior according to a degree of observed gap. Fifth, Korean firms close about one-fourth of the gap between their actual and target debt ratios within one year and thence targeting behavior explains far more of the observed changes in capital structure than market timing or pecking order considerations. Sixth, capital market is significant in determining optimal capital structure.

• KDI Journal of Economic Policy
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• v.34 no.4
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• pp.117-156
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• 2012

This paper decomposes and estimates trend/cyclical components of some key macro variables-GDP, inflation, and interest rate, using a simple DSGE model along with flexible trend specification. The extracted cyclical components of output and interest rate are similar to HP-filtered counterparts, despite some differences in persistence and volatility, while inflation resembles that from BK filtering. This implies that the usual practice of applying a single filtering method to the data of interest may be problematic. When the baseline model is extended to incorporate consumption habit and price indexation, habit turns out to be important in explaining the persistence of business cycles. Comparison of several alternative models shows that the usual practice of estimation of DSGE model using filtered data leads to biased results. Finally, various sensitivity analyses illustrate that (1) allowing for correlation between structural cyclical shocks and trend shocks and (2) including irregular components (in inflation rate) may deliver interesting/important implication for gap estimates.