Dong Yeub Kim

Date of Award:


Document Type:


Degree Name:

Doctor of Philosophy (PhD)


Economics and Finance


Basudeb Biswas


The relationships among the balance of payments and other macroeconomic variables in the Korean economy for the period 1961-85 are analyzed in this study. Theoretical studies on the effects of government policies on the economy and the balance of payments were conducted under both the Keynesian and monetary approaches. The Keynesian approach concentrates on the commodity and capital market adjustment factors and does not focus on the money market factors, whereas the monetary approach considers the balance of payments adjustments as a symptom of money market disequilibrium alone.

The basic assumptions of those two approaches, taken seperately, are not fully relevant to the Korean economy, which has unemployed resources, a high proportion of non-traded goods to traded goods, and monetary effects of balance of payments changes. Therefore, a model combining monetary and real factors to explain the short-run behavior of Korea's balance of payments in a single framework is developed.

The empirical results of the combined model show that its explanatory power is much higher than either of the two models taken separately. For balance of payments adjustment policy in Korea during the period 1961-85, fiscal and foreign exchange rate policy instruments were found to be very effective in the short-run, but monetary policy instruments were not.



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