Analysis of the Impact of EPU on Export and Import at the Processing Stage in Korea

Key Points

• Economic policy uncertainty has a greater impact on import levels than on export, particularly in relation to domestic demand.
• Shock response analysis shows significant effects on consumer goods, capital goods, and intermediate goods imports, excluding primary products.
• The study employs an SVAR model to identify shocks and uses local projection methods to estimate responses over time.
• Notably, the significant impacts are short-lived, lasting only 1 to 2 months, indicating limited long-term effects.