TY  - JOUR
AU  - Gilchrist,Simon
AU  - Sim,Jae W.
TI  - Investment during the Korean Financial Crisis: A Structural Econometric Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13315
PY  - 2007
Y2  - August 2007
UR  - http://www.nber.org/papers/w13315
L1  - http://www.nber.org/papers/w13315.pdf
N1  - Author contact info:
Simon Gilchrist
Department of Economics
Boston University
270 Bay State Road
Boston, MA  02215
Tel: 617/353-6824
Fax: NA
E-Mail: sgilchri@bu.edu

Jae Sim
Federal Reserve Board
E-Mail: Jae.W.Sim@frb.gov
AB  - This paper uses firm-level panel data to analyze the role of financial factors in determining investment outcomes during the Korean financial crisis. Our identification strategy exploits the presence of foreign-denominated debt to measure shocks to the financial position of firms following the devaluation that occurred during the crisis period. Structural parameter estimates imply that financial factors may account for 50% to 80% of the overall drop in investment observed during this episode. Our estimates also imply that foreign-denominated debt had relatively little effect on aggregate investment spending. Counterfactual experiments suggest sizeable contractions in investment through this mechanism for economies that are more heavily dependent on foreign-denominated debt however.
ER  -