Money-income-prices nexus in Korea.

• Main Authors: Kwang, Chan Chee., Wong, Chew Mun., Ling, Choo Hau.
• Other Authors: Tan Khee Giap
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Accounting
• Online Access: http://hdl.handle.net/10356/52990
• Institution: Nanyang Technological University

Using Geweke’s approach to Wiener-Granger Causality, money supply is found to be determinantly passive in Korea under the target-band-managed exchange rate regime. Administered interest rate and credit control rendered targeting of monetary aggregates futile as evidenced by strong unidirectional causation running from interest rate to money supply. Inflation in Korea appears to have taken on a hybrid of cost push and demand pull hypotheses. As a highly open economy dominated by international trade, bidirectional feedbacks between exchange rate and domestic prices could be due to accommodative measures by Bank of Korea in her management of reserve surpluses and domestic inflationary built-up.