Liberalization of Capital Flows in Korea: Big-Bang or Gradualism?

Dongchul Cho and Youngsun Koh

No 5824, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Capital market liberalization has become an irreversible trend in Korea since 1992. With the current level of high interest rate in Korea, however, drastic full-scale liberalization would certainly attract a large amount of capital inflows and appreciate the Korean won. This would affect the price competitiveness of Korean products in international markets, which could bring about significant macro-instability in an economy like Korea which relies heavily upon external transactions. Through simulations using a macro-model based on the neoclassical long-run convergence and the Keynesian short-run dynamics, this paper attempts to provide some quantitative assessments of several alternative policy choices including the speed of liberalization.

JEL-codes: F2 F4 (search for similar items in EconPapers)
Date: 1996-11
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Citations: View citations in EconPapers (2)

Published as Changes in Exchange Rates in Rapidly Developing Countries. Ito,Takatoshiand Anne O. Krueger, eds., Chicago: The University of Chicago Press, 1999,pp. 285-306.
Published as Liberalization of Capital Flows in Korea: Big Bang or Gradualism? , Dongchul Cho, Youngsun Koh. in Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice, and Policy Issues , Ito and Krueger. 1999

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