Investment during the Korean Financial Crisis: A Structural Econometric Analysis / Simon Gilchrist, Jae W. Sim.

Format:

Book

Author/Creator:

Gilchrist, Simon.

Contributor:

National Bureau of Economic Research.

Sim, Jae W.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13315.

NBER working paper series no. w13315

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Investment during the Korean Financial Crisis

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2007.

Summary:

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.

Notes:

Print version record

August 2007.