Asian Financial Crisis and Exchange Rate Pass-Through in Korea

Minsoo Lee

Review of Applied Economics, 2005, vol. 01, issue 01, 20

Abstract: This paper empirically examines the asymmetric price setting behavior on exchange rate volatility from foreign firms of Korea’s major trading partners which causes an incomplete exchange rate pass-through into import prices in Korea. The study demonstrates that there exists a significant difference between the exchange rate pass-through to aggregate import prices in Korea during the post-Asian financial crisis period and its counterpart during the pre-crisis period. The results from time series data support that both short-term and long-term exchange rate pass-through elasticities to import prices in the Korean economy during the post-Asian financial crisis period are greater than those during the pre-crisis period. The pass-through can be endogenous to the monetary policy regime. For the case of Korea, pass-through rates into import prices at least during the post-crisis period are more a function of macroeconomic conditions and international markets than the domestic monetary policy.

Keywords: Financial Economics; International Development; International Relations/Trade (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:reapec:143484

DOI: 10.22004/ag.econ.143484

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