Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153438
Authors: 
Sánchez, Marcelo
Year of Publication: 
2009
Series/Report no.: 
ECB Working Paper 1004
Abstract: 
This paper attempts at characterising South Korean monetary policy in the period of explicit inflation targeting started in 1999. We explain Korean interest rates in relation to an estimated macro-model, assuming that monetary policy is set optimally. This allows us to obtain the central bank’s parameters in the policy objective function. During the IT regime, the data support that the Bank of Korea pursued optimal policy geared towards achieving price stability, with the degree of interest rate smoothing being estimated to be considerable. In addition, the central bank loss function is estimated to include negligible weights on output and exchange rate variability.
Subjects: 
inflation targeting
optimal monetary policy
small open economies
South Korea
JEL: 
E52
E58
E61
Document Type: 
Working Paper

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