Inclusive Empirical Studies on Endogenous Monetary Theory in South Korea(2002-2019)

Abstract

Money endogeneity and interest rate exogeneity possess two properties of endogenous monetary theory. In particular, Korean economy has traditionally high ratio of exports and expects to increase government spending due to the increase of welfare cost by aging. This paper verifies them by using benchmark rate, interest rate and the balance-sheet of depository financial institution. The empirical result shows that there is money endogeneity for overall sectors. Interest rate exogeneity is also identified by the empirical analysis. Especially, money endogeneity appears to more stronger trend after the global financial crisis.