Assessing Macroprudential Policies: Case of Korea
This paper develops methods for assessing the sensitivity of capital flows to global financial conditions, and applies the methods in assessing the impact of macroprudential policies introduced by Korea in 2010. Relative to a comparison group of countries, we find that the sensitivity of capital flows into Korea to global conditions decreased in the period following the introduction of macroprudential policies.
One of the authors (Shin) was involved in the design of the macroprudential policy tools introduced in Korea in 2010, and hence is not a disinterested party in the findings reported in this paper. We are grateful to Maurice Obstfeld and two referees for the symposium issue on capital flows of the Scandinavian Journal of Economics for their comments and guidance on an earlier draft. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.