East Asian Economic Review

  • 제29권1호
  • /
  • Pages.41-76
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  • 2025
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  • 2508-1640(pISSN)
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  • 2508-1667(eISSN)
대외경제정책연구원 (Korea Institute for International Economic Policy)
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The Drivers of Inflation in Korea: Insights from a Small Open DSGE Model

  • 투고 : 2025.01.23
  • 심사 : 2025.03.10
  • 발행 : 2025.03.30
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초록

This study analyzes the drivers of inflation in South Korea using a Dynamic Stochastic General Equilibrium (DSGE) model tailored to the characteristics of Korea as a small open economy. Employing quarterly data from 1999Q2 to 2023Q2, Bayesian estimation is used to estimate Korea-specific parameters. Based on the estimated parameters, impulse response analysis and historical decomposition are conducted. The results indicate that cost-push shocks tied to imported goods pricing have been the primary driver of recent inflation surges in Korea. Accordingly, policymakers need to adopt a comprehensive approach-including not only monetary policy but also macroprudential measures and raw material supply management-to mitigate supply-side inflationary pressures effectively.

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과제정보

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2022S1A5A8052515). I would like to thank three anonymous referees for their insightful comments.

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