Sangheon (Heon) Ahn

This paper shows how invoicing currency reshapes the welfare case for capital-flow management. In a two-country New Keynesian model with optimal monetary policy, capital controls are beneficial under producer-currency pricing only when inefficient markup shocks move inflation through wealth effects. Under local-currency pricing, sticky export prices break the law of one price and create a wedge between exporters' foreign currency revenues and domestic marginal costs. A planner can use capital flow taxes/subsidies to steer the exchange rate, compress export markup distortions, and stabilize export price inflation. Controls raise welfare not only for markup shocks but also for efficient productivity and demand shocks, and they remain desirable even when wealth effects on labor supply are shut down. Under local-currency pricing, the parameter region with excessive capital flows disappears, strengthening the case for intervention.

We study how international pricing regimes influence optimal monetary–fiscal policy during global liquidity traps. Using the two-country New Keynesian model, we find that high exchange rate pass-through induces the less affected economy to raise interest rates, stabilizing relative prices but suppressing global demand. Low pass-through instead leads to sustained low rates to support global demand. Fiscal policy complements monetary policy limitations: high pass-through warrants global spending expansion, while low pass-through requires asymmetric spending in the more affected country.

This paper examines the welfare cost of short-run fluctuations using a real business cycle model incorporating pollution and environmental policy; households derive utility from the quality of the environment and firms pay green taxes to finance government expenditure for reducing pollution. We find that the taxation may result in a short-run welfare gain, in addition to its long-run social improvement. Such a short-run benefit of environmental policies has not been documented in the previous literature. We further show that Ramsey taxation is more effective in mitigating the welfare cost.

This paper examines the impact of changes in information and communication technologies (ICT) on skilled and unskilled labor at the business cycle frequency. To achieve this, we construct aggregate hours series for both labor groups using the monthly outgoing rotation group of the Current Population Survey from 1994 to 2023. Our empirical analysis, conducted with a structural vector autoregressive model, shows that the working hours of both groups respond positively to ICT innovations with similar magnitudes. We demonstrate that our findings are consistent with a dynamic stochastic general equilibrium model in which ICT capital complements both skilled and unskilled labor, and suggest a plausible range of elasticity of substitution between capital and labor.

Contrary to the conventional view that oil price hikes hinder economic growth in Korea, a country heavily dependent on energy imports, our analysis shows that demand-driven global economic activity shocks can significantly boost industrial production. We find that other structural oil market shocks do not necessarily dampen aggregate economic activity. At the industry level, the mining and manufacturing sectors respond positively, while the construction sector is negatively affected only by oil supply shocks. These findings highlight the need to account for the structural sources of oil price fluctuations and sectoral differences when analyzing the oil–macro relationship in small open economies.

This paper investigates how structural oil market shocks transmit through real oil price changes to the U.S. core prices. Separating out the sources of oil price increases reveals that supply shocks lead to significant and persistent increases in core prices while oil inventory demand shocks pull them down. Other demand-driven shocks do not cause any significant core price fluctuations. Examining different sample periods, we find empirical evidence supporting the strengthening of the oil price pass-through to some degree since mid-1980; however, not much change in the pass-through has been observed since the outbreak of Covid-19. Our findings highlight that understanding the sources of oil price changes is crucial for gauging their impacts on core prices and, furthermore, for the conduct of monetary policy.