• KDI Journal of Economic Policy
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• v.14 no.4
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• pp.3-26
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• 1992

The pupose of this paper is to construct a price determination model of the Korean economy and to find out the propogation mechanism of monetary and fiscal policies. The model is a small-size macroeconometric model consisted of ten core equations : consumption, investment, exports, imports, consumer price index, wage rate, corporate bond rate, potential GNP, capital stock, and GNP identity. The model is a Keynesian model : consumer price index is determined by markup over costs, and wage rate is expressed by Phillipse curve ralation. Two features of the model, however, distinguish this model from other macroeconometric models of the Korean economy. First of all, the estimation of potential GNP and the capital stock is endogenized as suggested by Haque, Lahiri, and Montiel (1990). This allows us to calculate the level of excess demand, which is defined as the difference between the actual GNP and the potential GNP. Second, interest rate, inflation and wages are all estimated as endogenous variables. Moreover, all quantity variables include price variables as important determinants. For instance, interest rate is an important determinant of consumption and investment. Exports and imports are determined by the real effective exchange rate. These two features make the interactions between excess demand and prices the driving forces of this model. In the model, any shock which affects quantity variable(s) affects excess demand, which in turn affects prices. This strong interaction between prices and quantities makes the model look like a classical model over the long run. That is, increases in money supply, government expenditures, and exchange rate (the price of the U.S. dollar in terms of Korean won) all have expansionery effects on the real GNP in the short run, but prices, wage, and interest rate all increase as a result. Over the long run, higher prices have dampenning effects on output. Therefore the level of real GNP turns out to be not much different from the baseline level ; on the other hand, the rates of inflation, wage and interest rate remain at higher levels.

• East Asian Journal of Business Economics (EAJBE)
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• v.8 no.1
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• pp.57-69
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• 2020

Purpose - This study examines what are the asset market fluctuations in Europe and how each economic variable affects major variables, and explore the dynamics of housing and stock market through Greece. The variables under consideration are balance on current account (BCA), index of stock (STOCK), gross domestic product (GDP), housing price indices (HOUSING), M3, real rate of interest (IR_REAL) and household credits (LOAN). We investigate the functional and causal relationships between housing and stock market. Research design, data, and methodology - Vector error correction model (VECM) is used to figure out the dynamic relationships among variables. This study also contains the augmented Dickey-Fuller unit root, cointegration, Granger causality test, and impulse response function and variance decomposition analysis by EViews 11.0. Results - The statistical tests show that all variables under consideration have one unit root and there is a longterm equilibrium relationship among variables for Greece. GDP, IR_REAL, M3, STOCK and LOAN can be considered as causal factors to affect real estate market, while GDP, LOAN, M3, BCA and HOUSING can bring direct effects to stock market in Greece. Conclusions - It can be judged that the policy that affects the lending policy of financial institutions may be more effective than the indirect variable such as monetary interest rate.

• Journal of the Korea Society of Computer and Information
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• v.24 no.6
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• pp.67-72
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• 2019

This paper proposes a computer vision-based banknote recognition system intended to assist the blind. This system is robust and fast in recognizing banknotes on videos recorded with a smartphone on real-life scenarios. To reduce the computation time and enable a robust recognition in cluttered environments, this study segments the banknote candidate area from the background utilizing a technique called Pixel-Based Adaptive Segmenter (PBAS). The Speeded-Up Robust Features (SURF) interest point detector is used, and SURF feature vectors are computed only when sufficient interest points are found. The proposed algorithm achieves a recognition accuracy of 98%, a 100% true recognition rate and a 0% false recognition rate. Although Korean banknotes are used as a working example, the proposed system can be applied to recognize other countries' banknotes.

• International Area Studies Review
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• v.13 no.3
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• pp.309-330
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• 2009

This paper analyzes comparatively the effects of changes in real effective exchange rates on the business fluctuations of the cases of Korea and Japan employing structural vector auto-regression(S-VAR) model which uses quarterly data for the five variables of real effective exchange rates, GDP gap, real interest rates, oil prices, inflation rates for the period of 1980-2006. The paper employes impulse-response analysis and variance decompositions. The paper finds that real exchange rate depreciations are contractionay for the case of Korea while they are expansionary for the case of Japan. These results are consistent with the prevailing empirical results that real exchange rate depreciations are contractionary for developing countries while expansionary for advanced countries.

• KDI Journal of Economic Policy
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• v.13 no.2
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• pp.3-19
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• 1991

This paper attempts to identify key determinants of long run movements of real M2 by using the Johansen procedure for estimating and testing cointegration relations. It turns out that the real M2 equation has been stable over the long run despite rapid changes in financial structure since 1975. Moreover, the real M2 equation can be reduced to a velocity equation with the opportunity cost variable, expected inflation less the weighted average rate paid on M2 deposits, being the key determinant. However, it does not work to use a market interest rate such as the yield on corporate bonds in place of expected inflation for calculation of the opportunity cost. In the U.S., a market interest rate can be used, but not in Korea. Presumably, two somewhat different reasonings can be used to explain this result. One is that the yield on corporate bonds may not adequately reflect the inflationary expectations due to regulations on movements in interest rates. The other is that M2 deposits are not readily substitutable with such assets as corporate bonds because of market segmentations, regulations, and so on. From the policymaker's point of view, this implies that the inflation rate is an important indicator of a policy response. On the other hand, policymakers do not regard movements of the yield on corporate bonds as an important policy indicator. Altogether, the role of interest rates has been quite limited in Korea because of incomplete interest rate liberalization, an underdeveloped financial system, implementation procedures of policy measures, and so on. The result that M2 velocity has a positive cointegration relation with expected inflation minus the average rate on M2 implies that frequent adjustments of the regulated rates on M2 will be necessary as market conditions change. As the expected inflation gets higher, M2 velocity will eventually increase, given that the rates on M2 do not change. This will cause higher inflation. If interest rates are liberalized, then increases in market interest rates will result in lagged increases in deposits rates on M2. However, in Korea a substantial portion of deposit rates are regulated and will not change without the authority's initiatives. A tight monetary policy will cause increases in a few market interest rates. But the market mechanism, upward pressure for interest rate adjustments, never reaches regulated deposit rates. Hence the overall effects of tight monetary policy diminish considerably, only causing distortions in the flow of funds. Therefore, frequent adjustments of deposit rates are necessary as market conditions such as inflationary expectations change. Then it becomes important for the policymaker to actively engage in adjusting regulated deposit rates, because the financial sector in Korea is not fully developed.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.1
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• pp.93-102
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• 2021

This study aims is to determine the factors that influence Indonesian rubber export supply based on the export destination countries. Indonesian rubber export supply is thought to be influenced by the variables like the volume of Indonesia rubber exports, the price of Indonesian natural rubber, the volume of domestic rubber production, the export volume of the previous period, the rupiah exchange rate against US$, the interest rate and real Gross Domestic Product (GDP). The data used is the annual time series from 1995-2015 based on export countries encompassing the United States, China, and Japan. Multiple linear regression with the Ordinary Least Square (OLS) method is applied to analyse the data. The results showed that the volume of Indonesian rubber exports to China is not influenced by domestic natural rubber prices and the Rupiah exchange rate against the Chinese Yuan. The volume of Indonesian rubber exports to Japan is influenced by the volume of domestic rubber production. The volume of Indonesian rubber exports to the three destination countries is influenced by the volume of domestic rubber production, interest rate, and real GDP.

• The Journal of the Korea Contents Association
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• v.20 no.6
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• pp.38-50
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• 2020

The purpose of this study is to identify the risks to financial institutions in terms of expanding potential risks due to the deferral of exposure, by identifying the structures in which real estate finance and financial institutions affect real estate prices at low interest rates. To this end, real estate financing is categorized according to the method of financing and the type of value measurement from a risk management perspective and analyzed for each case. As a result of analysis, in the case of profitable real estate, the rate of real estate is increased by directly decreasing the cap rate and directly affecting the fair value calculation method. In the case of non-profitable real estate, the real estate price is increased by expanding the leverage width of investors or financial institutions. Through the analysis of this case, the continuous increase in real estate prices over the past 10 years has the potential to prevent financial institutions from losing under the circumstances such as the growth of real estate finance due to the advancement of the financial market and the continued low interest rate trend that has continued for 10 years. It is judged that the deferred delay is part of the cause, which leads to an increase in the risk to financial institutions.

• KDI Journal of Economic Policy
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• v.31 no.2
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• pp.15-45
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• 2009

This paper estimates the term structure of interest rates with the setup of 3-factor no arbitrage model and investigates the trend of term premia and the effectiveness of changes in policy interest rates. The term premia are found to be high in a three-year medium term objective, which can be interpreted as reflecting the recognition of investors who expect a higher uncertainty in real activities for the coming three years than for a longer term. Then, in order to look into the effect of policy interest rates after the recent change of benchmark interest rate, this paper analyzes the effects of the changes in short-term interest rates of the financial market on the yield curve of the bond market at time of change. Empirical results show that the discrepancy between call rate, short-term rate in money market, and instantaneous short rate, short-term rate in the bond market, is found to be significantly widened, comparing to the periods before the change in benchmark interest rate. It is not easy to conclude clearly for now whether such a widening gap is caused by the lack of experiences with managing new benchmark interest rate or is just an exceptional case due to the recent turmoil in the global financial market. However, monetary policy needs to be operated in a manner that could reduce the gap to enhance its effectiveness.

• The Korean Journal of Applied Statistics
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• v.21 no.3
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• pp.497-508
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• 2008

As important markets have been closely connected in the opening and globalizing process, the instability in one market is increasingly possible to spread in other markets, which necessarily leads to careful investigations. In analyzing the short and the long run dynamics between the stock and the real estate markets, which are the two major investment options, this study conducts the statistical tests for the interrelationships between the two markets and the possibility of their substitution effect. In addition, the estimation results appear to be consistent with the simple causal relationship among the markets in the high interest rate period and the relatively complex relationship in the low interest rate period.

• Journal of the Economic Geographical Society of Korea
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• v.18 no.3
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• pp.348-365
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• 2015

This study empirically analyzes the recent conversion trend of Jeonsei to monthly rental contracts in the APT rental market and its major characteristics for three Gangnam districts using the real transaction Jeonsei and monthly rent prices data over the period of 2010.12 to 2015.4. The results show that in terms of deposits and substitutability the conventional apartment is more efficient than those of the reconstruction apartment. Moreover, monthly rental contracts are closely related with the movement of short-term interest rates. Given the same type of apartment, the result drawn from the substitutability between Jeonsei and monthly rental contracts reveals that the monthly leasing contract with the lower rate of deposit tends to have the higher conversion rate of Jeonsei to monthly rent. Thus, an urgent measure should be taken that the burdens of tenants with monthly rent contracts could be alleviated according to the rate of deposits.