Comment - Oil Shocks in a DSGE Model for the Korean Economy

    Research output: Chapter in Book/Report/Conference proceedingChapter

    Abstract

    This chapter describes the oil shocks using a dynamic stochastic general equilibrium (DSGE) model for the Korean economy. The Korean economy depends entirely on imports for its acquisition of crude oil, and households, entrepreneurs, and policymakers are interested in knowing to what extent the rise in oil prices affects the economy. Within an Bayesian estimation framework including DSGE-vector autoregressions (VARs), the empirical analysis used is based on Korean aggregate data. Using Bayesian analysis, the model is used to check the importance of each channel that transmits an oil price shock to the economy. It is found that the model economy produces reasonable posterior estimates of the structural parameters and works relatively well compared to impulse responses from the VAR with optimal prior weight from the DSGE model. A more elaborated model on government behavior is anticipated to investigate the pass-through of oil price shocks.
    Original languageEnglish
    Title of host publicationCommodity Prices and Markets
    Editors Takatoshi Ito and Andrew K. Rose
    Place of PublicationCalifornia USA
    PublisherUniversity of Chicago Press
    Pages321-322
    ISBN (Print)9780226386898
    DOIs
    Publication statusPublished - 2011

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