The Monetary Transmission Mechanism of a Small Open Economy with Sweeping Financial Reforms: The Case of Korea


This study reveals how a Korean monetary transmission mechanism evolves in the tumultuous decade of the 1990s. We show that (i) contractionary monetary policy shocks have more explanatory power for the post-crisis periods than for the pre-crisis period; (ii) the effects on output from external shocks attributed to the oil price and the U.S. federal fund rates are mixed; (iii) there is little positive spillover effect from the U.S. to Korea through the trade channel; and (iv) there is a positive spillover effect from the international capital market channel. © 2009, Emerald Group Publishing Limited

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Multinational Business Review