Analysis on Korean Economy with an Estimated DSGE Model after 2000

• Published in: KDI Journal of Economic Policy Vol. 36; no. 2; pp. 1 - 64
• Main Author: Kim, Tae Bong
• Format: Journal Article
• Language: English
• Published: Korea Development Institute 01.05.2014; 한국개발연구원
• Subjects: Bayesian Estimation(베이지안 추정); DSGE(동태확률모형); Korean Economy(한국경제); Small Open Economy(소규모 개방경제); 경제학
• ISSN: 2586-2995; 2586-4130
• DOI: 10.23895/kdijep.2014.36.2.1

This paper attempts to search the driving forces of the Korean economy after 2000 by analyzing an estimated DSGE model and observing the degree of implementation regarding non-systematic parts of both the monetary and fiscal policy during the global financial crisis. Two types of trends, various cyclical factors and frictions are introduced in the model for an empirical analysis in which historical decompositions of key macro variables are quantitatively assessed after 2000. While the monetary policy during the global financial crisis have reacted systematically in accordance with the estimated Taylor rule relatively, the fiscal policy which was aggressively expansionary is not fully explained by the estimated fiscal rule but more by the large magnitude of non-systematic reaction.