https://scholar.korea.ac.kr/handle/2021.sw.korea/274 Wed, 08 Apr 2026 12:07:36 GMT 2026-04-08T12:07:36Z https://scholar.korea.ac.kr/handle/2021.sw.korea/267930 Title: Overreaction and macroeconomic fluctuation of the external balance Authors: Na, Seunghoon; Yoo, Donghoon Abstract: We incorporate diagnostic expectations (DE) into small open economy (SOE) models to offer novel insights into business cycles, especially in emerging countries. DE induce overreactions in domestic absorption, leading to countercyclical external balances and endogenous boom-bust cycles driven by surprises rooted in distant memory. This framework offers a cognitive alternative to permanent income shock in conventional SOE models under rational expectations (RE). Using Argentine macro-international data, we estimate a quantitative SOE-RBC model with DE that captures the volatility and cyclicality specific to emerging countries and identifies diagnosticity levels consistent with prior research, and reduces reliance on trend-driven TFP shocks. Our findings highlight DE as an empirically plausible mechanism, enriching the literature by demonstrating how imperfect, memory-based expectations influence macroeconomic dynamics in an open economy context. © 2025 Tue, 01 Apr 2025 00:00:00 GMT https://scholar.korea.ac.kr/handle/2021.sw.korea/267930 2025-04-01T00:00:00Z https://scholar.korea.ac.kr/handle/2021.sw.korea/268472 Title: The development of local currency bond markets and uncovered interest rate parity Authors: Park, Cyn-Young; Shin, Kwanho Abstract: This study examines how the growth of local currency bond markets (LCBM) and the expansion of nonbank financial institutions (NBFI) influence the uncovered interest parity (UIP) condition, based on the actual expectations of market participants in emerging market economies (EMEs). Using data from January 1996 to April 2022, we find a reduction in UIP deviations with the growth of LCBMs and the expansion of NBFIs in EMEs. This progress also brings the dynamics of UIP premiums in these markets closer to those seen in advanced economies. Additionally, in EMEs with a larger size of LCBMs, capital flows exhibit increased sensitivity to UIP premiums. However, despite the development of LCBMs, we find strong evidence of the 'original sin redux' in both advanced and emerging economies, as evidenced by the increase (or decrease) of gross portfolio debt inflows with an appreciating (or depreciating) exchange rate. Additionally, we find that LCBM advancements amplify the impact of actual exchange rate depreciation, but only in EMEs. Tue, 01 Apr 2025 00:00:00 GMT https://scholar.korea.ac.kr/handle/2021.sw.korea/268472 2025-04-01T00:00:00Z https://scholar.korea.ac.kr/handle/2021.sw.korea/267651 Title: Endogenous growth driven by government spending under quasi-hyperbolic discounting Authors: Kang, Minwook Abstract: This paper examines the impact of government spending on economic growth within a quasi-hyperbolic discounting framework, integrating Barro's (1990) and Laibson's (1997) models. It highlights the negative effects of present bias on optimal government spending and endogenous growth rates. Sat, 01 Feb 2025 00:00:00 GMT https://scholar.korea.ac.kr/handle/2021.sw.korea/267651 2025-02-01T00:00:00Z https://scholar.korea.ac.kr/handle/2021.sw.korea/268241 Title: The Impact of the Belt and Road Initiative on Outward Foreign Direct Investment: Evidence from Chinese firms Authors: Jiaqi Feng; 이홍식; 박가희 Abstract: Purpose – This paper scientifically evaluates the promotion effect of the BRI on corporate OFDI, which can help in understanding China’s OFDI issues more deeply, and provide reliable empirical evidence for companies. Design/Methodology/Approach – Based on the data of overseas subsidiaries of Chinese A-share listed companies from 2012 to 2022, this paper considers BRI a policy event. It uses the difference-in-difference method to test the impact of the BRI on Chinese firm foreign direct investment. Findings – The study found that BRI significantly increased the level of OFDI of Chinese listed companies. The mechanism test found that BRI also enabled supported enterprises to obtain more tax incentives and government subsidies for overseas investment, thereby increasing the level of OFDI of enterprises. Research Implications – This paper draws on the idea of quasi-natural experiments, takes BRI as the entry point of the causal identification mechanism, and explores its impact on corporate outward direct investment, which helps to enrich the research results on the influencing factors of corporate outward direct investment and the economic effects of BRI. Also, It provides a logical paradigm based on the channels of “government subsidies” and “tax incentives” to explore the internal logic of BRI’s impact on enterprise overseas direct investment. It also introduces the characteristics of enterprises and host countries and the level of political connections of enterprises into the analysis framework of the promotion effect of BRI to explore whether BRI has a heterogeneous impact on the level of enterprise overseas direct investment. Sat, 01 Feb 2025 00:00:00 GMT https://scholar.korea.ac.kr/handle/2021.sw.korea/268241 2025-02-01T00:00:00Z