Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

The Relevance of the Fiscal Theory of Price Level in Korea

Vol.26, No.1, March , 1–34


English Version |  Korean Version
  •   (Department of Economics, Seoul National University)

  •   (Department of Economics, Seoul National University)

  •   (Department of Economics, Seoul National University)

  •   (Department of Economics, Seoul National University)

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Abstract  

This paper estimates a small-scale New Keynesian DSGE model using Bayesian methods to address the question of what monetary and fiscal policy regimes characterized the recent Korean data after 2000. We find that a passive monetary policy and an active fiscal policy prevailed. This finding implies that the Fiscal Theory of Price Level (FTPL) is relevant in understanding the dynamics of the key macroeconomic variables in Korea.


Keywords
   FTPL, Monetary Policy, Fiscal Policy, DSGE model

JEL classification codes
   E13, E31, E32
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