Young-Sae Kim

This article studies the effects of inflation targeting (IT) on relative price variability (RPV) using a data set of twenty countries comprising both targeters and nontargeters. We find that a decline in mean inflation after IT adoption is not necessarily associated with a similar fall in RPV and that what matters most for the structural changes in RPV is the initial inflation regime prior to the adoption of IT rather than IT adoption itself. IT adoption impacts the shape of the underlying relat

This paper reviews recent advances in the economic literature on corruption in order to put some of this material into a broader analytic perspective. Using widely accepted definition of corruption in the literature, we argue that excessively centralized government structure is one of the ultimate factors that drive high level of corruption. In accordance with existing studies, we found there is ample evidence that corruption reduces economic efficiencies and has significant distributional conse

Using panels of housing purchase price and jeonse price, I investigate house price convergence in Korea. This study is to analyze mainly two important issues. First, I test whether the house prices are converging over time. For any type of the house prices,purchase price and jeonse price, I find there is little evidence of overall house price convergence. Next, I employ a clustering algorithm to examine the existence of a convergence club where the cross-sectional variation within a subgroup dec

To explore possible sources of the well-documented uncovered interest parity (UIP) violation in the foreign exchange market, this paper scrutinizes structural changes in monetary reactions to inflationary pressure in the conventional approaches to nominal exchange rate and examines how this small but important change has an effect on the empirical implications of the UIP condition. In addition to some salient features found in the euro exchange rate, by introducing occasional monetary policy reg

To distinguish inflation signal from transient noise, monetary policymakers have long used core inflation measures. Using disaggregate CPI data for Korea, this paper reviews extant measures of core inflation and documents several important empirical features of the measures. Our theoretical analysis demonstrates that the stylized facts on the extant measures are not compatible with a single stochastic trend, and our empirical findings strongly support this view. Motivated by price divergence, we

Building on time-series and cross-sectional properties of survey forecasts, this paper documents a fruitful set of stylized facts of inflation expectations in Korea that a macroeconomic theory must aim to explain. Despite the fact that survey measures of inflation expectations have a similar central tendency, the amount of disagreement among different types of economic agents appears to be substantial and shows no clear relationship with relative price variability. The analysis of micro-level in

This paper addresses some important issues regarding the nature of inflation expectations. By utilizing measures of inflation expectations formed by consumers and professionals, a series of empirical applications are performed to identify main driving forces of variations in inflation expectations. Tests of forecast efficiency consistently indicate that survey expectations are not rational, and thus the expectations of real-world economic actors, not rational agents in a model, are found to be w

To explore possible sources of the well-documented uncovered interest parity (UIP) violation in the foreign exchange market, this paper scrutinizes structural changes in monetary reactions to inflationary pressure in the conventional approaches to nominal exchange rate and examines how this small but important change has an effect on the empirical implications of the UIP condition. In addition to some salient features found in the euro exchange rate, by introducing occasional monetary policy reg

My dissertation studies models of exchange rate determination that are standard in all respects except that market participants have incomplete knowledge about the economic structure, and employ adaptive learning rules to learn about the economic environment.My work on introducing model uncertainty into standard models is motivated by the well documented fact that when the underlying economic environment is known and is common knowledge to market participants, the models under rational expectati

This paper revisits the model of Mark (2009) where real exchange rate is determined by expected inflation and aggregate economic activity gap with a special emphasis on changing monetary policy rules and learning. By expanding sample periods and countries, this paper documents some basic features of real exchange rate data and significant differences in time-series properties across regimes. Simulation results suggest that the model with real-time learning generally outperforms the model under r

This paper examines the flattening of the Phillips curve in Korea and investigates the factors underlying the weak relationship between inflation and aggregate real activity. Using a standard expectations-augmented Phillips curve framework, the empirical analysis provides robust evidence of a flattening Phillips curve across various measures of inflation and real activity. However, when median inflation is used as the inflation measure, rather than traditional core inflation measures that exclud