Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society

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Journal of Economic Theory and Econometrics
Journal of the Korean Econometric Society

Journal of Economic Theory and Econometrics (JETEM) is a peer-reviewed, internet-based, open-access international journal aiming to publish high-quality papers in all areas of economics. JETEM is the official publication of the Korean Econometric Society, carrying papers written either in English or in Korean. In this web-site, all English articles are fully downloadable free of charge; for Korean articles, only the title and the abstract in English are provided along with a fee-based link to the full text.

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Recently Published Articles

Volume 32, Issue 1 (March 2021)

Abstract | PDF (885 kilobytes)

No abstract is available for this article.

Impacts of Ambient Air Pollution on Health Risk in Korea: A Spatial Panel Model Assessment, Pages 1–24

Hyung Sun Yim, Seong-Hoon Cho, Byeongseon Seo

Abstract | PDF (583 kilobytes)

This paper investigates the impact of air quality pollution on respiratory health risk in Korea. In particular, we consider transboundary effects of particulate matter (PM10) on the health risk of pneumonia by using the spatial panel model. PM10, generated by natural phenomena and anthropogenic activities, migrates to neighboring areas contributing to not only local but also ambient regional health risks. We employ the spatial panel model to explain the spillover effects of air pollution on the respiratory health risk. The panel data covers environmental, demographic and economic variables that are associated with pneumonia of 120 local districts in Korea during the period from 2010 to 2015. Empirical evidence based on non-spatial and spatial models commonly indicates that the impact of air pollution on pneumonia-related risk is significant. The spatial panel model assessment reveals improvement in explanation and evidences more significant effect of ambient air pollution on pneumonia related hospital visits. As such, evidences of spatial dependence and borderless impacts of air pollution on the health risk of pneumonia are found to be strong. We also investigate the spatial dynamics of the potential association between air pollution and respiratory diseases with respect to variations in wind direction by extending the conventional weight matrix specification. Empirical results imply that transboundary effects of PM10 on health risk are stronger for districts located downwind from Northwest districts than from other directions.

Strategic Corporate Social Responsibility by a Multinational Firm and International Privatization Policies, Pages 25–53

Lili Xu, Sang-Ho Lee

Abstract | PDF (597 kilobytes)

We consider a multinational global firm that adopts corporate social responsibility (CSR) in two countries and examine international privatization policies with the strategic transmission of CSR. We find that the strategic level of CSR crucially depends on the percentage of the global firm’s shares held in each country. We show that single privatization increases (decreases) CSR when the share is small (large), while dual privatization always leads to the highest CSR. We also show that domestic welfare under global standard of CSR, which is set to improve global welfare, is higher (lower) than that under the global firm’s strategic CSR when the share is small (large). Finally, we show that dual nationalization is a unique equilibrium in an international privatization choice game, irrespective of imposing the global standard of CSR, which causes global welfare loss.

Optimal Wage Contracts under Reference-Dependent Preferences, Pages 54–79

Gue Sung Choi, Jaeok Park

Abstract | PDF (209 kilobytes)

In this paper, we consider a labor market consisting of a firm and a worker and study employment contracts that the firm chooses when the worker has reference-dependent preferences with respect to wages. The firm offers an employment contract, which specifies the effort level and the wage in each period, and if the worker accepts the contract, she decides whether to continue working for the firm in each period. The worker forms a reference wage in each period based on the past wages, and we introduce gain-loss utility into the worker's payoffs from employment and unemployment. We show, among other results, that when the initial reference wage is low, the firm's optimal employment contract has initial high wages if the worker is loss averse and initial low wages if she is gain seeking. Our results provide explanations for signing bonuses and seniority-based pay systems based on reference-dependent preferences.

Earned Income Tax Credit and Heterogenous Agent Dynamic Stochastic General Equilibrium Model, Pages 80–115

Jong-Suk Han, Sun-Bin Kim, Yongsung Chang

Abstract | PDF (4411 kilobytes)

As the Earned Income Tax Credit(EITC) massively expanded in 2019, 20% of total households benefit from the credit. Due to this large reform, we expect that any future reform will also largely affect the aggregate economy; thus, the heterogeneous agent life cycle dynamic stochastic general equilibrium (HA-LC-DSGE) model will be widely used in future research. This paper reviews the EITC reforms in Korea since the first implementation and surveys the previous studies, examining the labor supply effects. We address why the HA-LC-DSGE model is necessary to examine the current EITC system in Korea. Then, we provide an example of the HA-LC-DSGE model with a policy simulation of the EITC expansion and explain the model's salient ingredients to understand the results.


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