Economic Catch-up and Technological Leapfrogging The Path to Development and Macroeconomic Stability in Korea
The Path to Development and Macroeconomic Stability in Korea
Chapter 6: Maintaining macro-stability for a crisis-resilient growth in Korea
AbstractIn Chapter 6 a structuralist macroeconomics perspective is taken to interpret the two recent financial crises in Korea, and a new policy framework and reform measures are suggested to build a crisis-resilient macro-financial system in Korea. The chapter focuses on the so-called “Frenkel-Neftci” cycle and the two kinds of expected spreads, namely, interest spread and capital gain spreads, which initially motivate foreign investment in emerging economies. To establish a crisis-resilient macro-financial system, a new macro policy framework that can be described as “an intermediate system” is proposed, with full capital mobility but with an explicit option of Tobin taxes, a flexible basket, band, and crawl exchange rate system, and relative independence in monetary policy making with a new balance between interest rates and exchange rate targeting. A justification for the intermediate system proposed in this chapter is made because it is not easy to prevent the “two kinds of spreads” from happening simultaneously in a standard (orthodox) open macroeconomic policy setting.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.