Korean Current Account Surplus and the Transmission of the Won-Dollar Exchange Rate

2015 ◽  
Author(s):  
Seongman Moon ◽  
Yoon Sun Choi
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Current Account Surplus ◽  
Dollar Exchange Rate

What Explains Current Account Surplus in Korea?

2018 ◽  
Vol 17 (2) ◽  
pp. 70-93
Author(s):  
Chirok Han ◽  
Kwanho Shin
Keyword(s):  
Exchange Rate ◽  
Fiscal Policy ◽  
Current Account ◽  
Current Account Balance ◽  
Budget Deficits ◽  
Current Account Surplus ◽  
Short Run ◽  
The Right ◽  
The Impact ◽  
The Current Account

Since the currency crisis in 1998, Korea has experienced continuous current account surpluses. Recently, the current account surplus increased more rapidly—amounting to 7.7 percent of GDP in 2015. In this paper, we investigate the underlying reasons for the widening of Korea's current account surpluses. We find that the upward trend in Korea's current account surpluses is largely explained by its demographical changes. Other economic variables are only helpful when explaining short run fluctuations in current account balances. Moreover, we show that Korea's current account surplus is expected to disappear by 2042 as it becomes one of the most aged economies in the world. Demographic changes are so powerful that they explain, quite successfully, the current account balance trends of other economies with highly aged populations such as Japan, Germany, Italy, Finland, and Greece. When we add the real exchange rate as an additional explanatory variable, it is statistically significant with the right sign, but the magnitude explained by it is quite limited. For example, to reduce the current account surplus by 1 percentage point, a 12 percent depreciation is needed. If Korea's current exchange rate is undervalued 4 to 12 percent less than the level consistent with fundamentals, it is impossible to reduce Korea's current account surplus to a reasonable level by adjusting the exchange rate alone. Another way to reduce current account surplus is to expand fiscal policies. We find, however, that the impact of fiscal adjustments in reducing current account surplus is even more limited. According to our estimates, reducing the current account surplus by 1 percentage point requires an increase in budget deficits (as a ratio to GDP) of 5 to 6 percentage points. If we allow endogenous movements of exchange rate and fiscal policy, the impact of exchange rate adjustment increases by 1.6 times but that of fiscal policy decreases that it is no longer statistically significant.

scholarly journals Negative Effect of Current Account Surplus on Long-term Growth; Focused on the Cases of Japan, S. Korea and China

2021 ◽  
Vol 9 (9) ◽  
pp. 116-147
Author(s):  
Yongshik Choe ◽  
Seong-yop You
Keyword(s):  
Growth Rate ◽  
Exchange Rate ◽  
Current Account ◽  
World Economy ◽  
Current Account Surplus ◽  
Foreign Reserve ◽  
The World ◽  
International Payment ◽  
Negative Effect

It is a teaching of current economics that the surplus of current account in international payment contributes to the increase of income. But it has got a negative effect on the long-term growth in the reality, which is easily proved by some instances. First, the Japanese growth rate has been very low despite its current account maintaining a huge surplus. Second, it is another instance that South Korea has suffered from its low growth rate even if its government has enforced the policy to defend its exchange rate from declining while its current account surplus has become large since 1998. Next, the growth rate of China has decreased from the time when its foreign reserve has begun to reduce despite its huge surplus of current account. This paper clarifies the reason why their growths are stagnant despite their huge surpluses in current account. If this paper changes the policies of above countries, it would resolve their economic difficulties and settle the imbalance of the world economy. And this paper would contribute to the evolution of economics.

Optimistic Mexico budget maintains fiscal tightness

2021 ◽  
Keyword(s):  
Exchange Rate ◽  
Interest Rates ◽  
Current Account ◽  
Federal Budget ◽  
Oil Price ◽  
Fiscal Deficit ◽  
Short Term ◽  
Dollar Exchange Rate ◽  
Content Type ◽  
High Inflation

Significance It contains the federal budget and revenue legislation, as well as key macroeconomic domestic and international assumptions and projections, several of which look highly optimistic. Impacts Banxico will probably increase interest rates further due to relatively high inflation levels. Tight fiscal and monetary conditions will probably arrest short-term growth. The peso-dollar exchange rate should remain broadly stable as the fiscal accounts present manageable deficits in 2021-22. The current account is expected to show a small surplus during 2021 as a whole, and a marginal deficit next year. Legislators may raise the expected oil price for 2022 to boost spending in some areas without increasing the fiscal deficit target.

Chinese Revaluation and Emerging Market Prospects

2010 ◽  
Vol 212 ◽  
pp. F15-F17
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Current Account ◽  
Global Economy ◽  
Emerging Market ◽  
Current Account Surplus ◽  
Developed Economies ◽  
Bric Countries ◽  
The Us ◽  
The Exchange Rate

While the financial crisis of 2008 caused deep recession in most of the world's developed economies, many of the largest emerging markets weathered the financial storm comparatively well. China remains a vital source of global demand, while India is also gaining an increasing weight in the global economy. China has differed from India and Brazil in that this growth has been associated with a significant current account surplus, and this has been a major issue, particularly in discussion with the US. The Russian current account surplus has been associated with its role as an oil producer. In this section we first compare economic performance prior to and during the financial turmoil among the so-called BRIC countries (Brazil, Russia, India and China) which constitute the world's largest emerging markets. We then discuss the Chinese current account surplus and policies that might be adopted to reduce it. These involve the expansion of demand in China, along with an appreciation of the exchange rate. However, there is no real long-term improvement of global imbalances if China just repegs the exchange rate at a higher level.

Complacency will be main threat to Croatia’s tourism

2018 ◽  
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Western Europe ◽  
Foreign Currency ◽  
Tourism Industry ◽  
Major Contributor ◽  
Current Account Surplus ◽  
Content Type ◽  
Foreign Tourism ◽  
Skills Shortages

Subject Croatia’s tourism industry. Significance Tourism made up an estimated 20% of Croatia’s GDP in 2017. It was a driver of growth with 13% more foreign visitors year-on-year and a major contributor to last year’s current account surplus. The foreign currency earned propped up the kuna. Foreign tourism accounts for an estimated 7% of employment. Impacts The leaking of better-educated Croatian labour to Western Europe could lead to skills shortages in such industries as tourism. Croatia could fall behind a burgeoning trend towards up-market tourism. Brexit itself is unlikely to affect UK tourism to Croatia which will depend much more on the kuna-sterling exchange rate.

Chapter II. The Home Economy

1978 ◽  
Vol 84 ◽  
pp. 22-34
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
The State ◽  
Recent Past ◽  
Current Account Surplus ◽  
State Of The Economy ◽  
The Exchange Rate ◽  
External Account

The state of the economy in 1977 was described in Chapter I. In the first quarter of this year, there have been two connected developments which have significantly altered the picture of the very recent past and the immediate future which we presented in the February Review. The first is that the current balance on external account in the first quarter is now estimated to have been in deficit by over £200 million compared with the surplus of some £500 million which we expected in February. This represented a massive deterioration—of nearly £600 million—from the last quarter of 1977. The second is that, probably in consequence, the exchange rate fell sharply during the quarter, and ended April (in IMF weighted terms) at 62.5, or roughly the level ruling before last autumn's sharp appreciation. In February, on the basis of the forecast current account surplus, we had expected the rate to appreciate a little further in early 1978.

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