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June 7, 2026Asian Economic Papers

Natural Interest Rate in Korea: A Multi-Model Approach in a Small Open Economy Context

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Authors

KDKyeongtak DoJAJuhyun AhnHJHae Ri Jung

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Overview

Randomized trial estimates Korea's natural interest rate, suggesting external factors significantly influence fluctuations.

Key Points

  • This research aims to estimate Korea's long-run natural interest rate (NIR) using various modeling approaches.
  • Utilized six models including semi-structural and time-series approaches.
  • Focused on the natural interest rate within a small open economy framework.
  • Analyzed data from 2000 to 2020 with projections into 2024.
  • The NIR declined from 2000 to 2020, then increased modestly post-pandemic.
  • Recent NIR estimates for 2024:Q2 range from −0.4 to 1.2 percent.
  • Estimates across methodologies vary by 1 to 2 percentage points and show substantial uncertainty.

Cite This Study

Do et al. (2026) studied this question.

synapsesocial.com/papers/6a250cbc7def13d035e1ceffhttps://doi.org/10.1162/asep.a.994
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1The Natural Rate of Interest in <scp>Asia</scp>2026
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  3. 3Changes in Inflation Dynamics in Korea: Global Factor, Country Factor and Their Propagation*2024 · 1 citations
  4. 4Measuring the Natural Rate of Real Interest for the Chinese Economy2026
  5. 5External financial and monetary policy shocks: Do they matter for Korean macroeconomy?2024 · 2 citations