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The Relative Importance of Aggregate and Disaggregate Shocks in Korean Business Cycles

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  • Kang, Gi Choon
  • Orazem, Peter

Abstract

This study examines the role of aggregate and disaggregate shocks in a small open economy, Korea. Variation in the growth rates of industrial output is decomposed into portions attributable to aggregate, industry group, and sector-specific shocks. Although all types of shocks play a role, sectoral shocks are the dominant source of sectoral output fluctuations. While aggregate shocks are a significant source of sectoral and aggregate output fluctuations, they are no more important than in large industrialized economies that have been studied previously. Consequently, small open economies may not be any more susceptible to aggregate disturbances than are the G-7 countries.

Suggested Citation

  • Kang, Gi Choon & Orazem, Peter, 2003. "The Relative Importance of Aggregate and Disaggregate Shocks in Korean Business Cycles," Staff General Research Papers Archive 10351, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:10351
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    References listed on IDEAS

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    1. Norrbin, Stefan C. & Schlagenhauf, Don E., 1990. "Sources of output fluctuations in the United States during the inter-war and post-war years," Journal of Economic Dynamics and Control, Elsevier, vol. 14(3-4), pages 523-551, October.
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    Cited by:

    1. Hyun, Junghwan, 2018. "The dynamics of credit reallocation: South Korea's post-crisis experience," Japan and the World Economy, Elsevier, vol. 48(C), pages 57-70.

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    Keywords

    Disaggregate analysis; shocks; variance decomposition;
    All these keywords.

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