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Transmission of external shocks and regional heterogeneity: Evidence from Korean province-level data

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  • Chung, Min-Su
  • Lim, Hyunjoon

Abstract

This paper uses panel local projection methodology to analyze Gross Regional Domestic Product (GRDP) and employment responses to external shocks, including US monetary policy, oil price, and geopolitical risk shocks. Our main findings are that the effects of US monetary policy and oil price shocks manifest with a lag of one to two years, while the impact of geopolitical risk shocks is estimated to occur immediately and dissipate rapidly. The factors behind heterogeneity in regional economic responses to external shocks were identified as income levels, industrial and demographic structures, household indebtedness, and global integration. These findings suggest that external shocks can exert heterogeneous effects depending on the nature of each region, primarily influenced by their industrial structure and economic vulnerability.

Suggested Citation

  • Chung, Min-Su & Lim, Hyunjoon, 2024. "Transmission of external shocks and regional heterogeneity: Evidence from Korean province-level data," Journal of Asian Economics, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:asieco:v:94:y:2024:i:c:s104900782400085x
    DOI: 10.1016/j.asieco.2024.101790
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    More about this item

    Keywords

    US monetary policy shocks; Oil price shocks; Geopolitical risk shocks; GRDP; Local projection methodology;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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