KOR

Research Staff

Research Staff

Jang, Bosung Research Fellow Macro-Financial Analysis
Member of the Center, Fixed Income Research Center

Profile

Education
2001 B.A. in Economics and Business (dual), Yonsei Univeristy
2009 M.A. in Economics, University of British Columbia
2013 M.A. in Economics, The Ohio State University
2017 Ph.D. in Economics, The Ohio State University
Professional Experience
Korea Financial Engineering and Consulting 2001~2004
Bank of Korea (Economic Statistics Dept., Research Dept., Monetary Policy Dept., Advisor to the Governor)

Publications

Opinion

Population Decline and Labor Resources in Korea: Current State and Implications / Nov. 07, 2023
Korea’s labor force is on the decline. Considering ongoing population aging and gender imbalances in labor force participation, Korea has two policy directions to expand the labor force: one for increasing elderly workers and the other for boosting the female workforce. However, given that labor force participation among elderly men has already reached a high level, the ultimate solution comes down to women’s greater participation in the labor market. Unlike major economies, the labor force participation rate for Korean women is low on average and it exhibits a distinctive M-shaped curve for their age group. The latter is attributable to their labor market exits during child-rearing years. Hence, the development of policies should be geared toward targeting women who go through the child-rearing stage, aimed for expanding the internal labor force base. These policy efforts are expected to serve as a crucial driving force for enhancing stock market returns as well as the real economy.
The US Bank Crisis in March and a Look Ahead / May. 30, 2023
In March 2023, some small and medium-sized US banks came to fail, which has put strains on global financial markets. An empirical analysis finds that when a negative US financial shock hits, stock prices fall in Korea while the spreads between corporate and government bond yields and between CP and call rates are on the rise. In particular, the interest rate spreads tend to widen for nearly six months, thereby having prolonged negative effects on the market. Fortunately, the March 2023 bank crisis was not severe, and its aftershocks are expected to subside gradually as the market regains stability. However, it is noteworthy that the Fed is anticipated to keep higher interest rates for the time being and a number of risk factors are lurking in the US banking sector. Accordingly, there is a possibility that other small and large shocks will hit the financial market in the near future. In this respect, it is time to take extra precautions to prevent the US financial instability from setting off turbulence in Korea. Considering the current inflation in Korea, it seems too early to discuss a pivot in monetary policy. But if financial stability risk continues to escalate, the financial authorities should take a targeted approach to supply liquidity immediately to areas in need to head off turmoil promptly.
The Paradox of Stablecoins: Risks and Policy Challenges / Dec. 06, 2022
Despite the literal meaning, stablecoins entail risks that cannot be ignored. Fiat-collateralized stablecoins, the mainstream type, could invite massive requests for redemption or a speculative attack due to inadequate management of reserve assets. A sharp price drop in non-stablecoins such as Bitcoin could put downward price pressure on the entire stablecoin market. Furthermore, distress in the stablecoin market could be passed on to the traditional financial market as well as the crypto market. There is also a possibility that the supply of stablecoins would come into conflict with monetary policy. In Korea, policy discussions about crypto assets primarily center around non-stablecoins, which raises concerns over a regulatory gap in stablecoins. In preparation for the rapid growth of Korea’s stablecoin market, the government needs to promptly establish the related institutional framework. First of all, the policy direction should be geared toward inducing the issuance of fiat-collateralized stablecoins than other types. In addition, regulations on stablecoins should be differentiated depending on the scope of use to keep a balance between technical neutrality and financial stability. It is also necessary to support the redemption of stablecoins, which are not covered by deposit insurance, by applying the supervisory guideline for prepaid electronic money. To prevent conflicts with monetary policy, it is worth considering measures for large stablecoin issuers that impose a stricter regulation on prudence or a limit on the total issuance volume.
The Fed’s Tightening and Interest Rates of Korea: Impacts and Implications / Jul. 12, 2022
Despite a string of interest rate increases by the Fed, upside risks to inflation remain higher in the US. Unless structural inflationary pressures are alleviated, the Fed's tightening shocks are likely to recur, raising its policy rate aggressively. An empirical analysis indicates that the Fed’s tightening shocks drive up a wide range of market interest rates in Korea, thereby adversely affecting financial conditions. In particular, such shocks have been found to raise long end yields of Korea Treasury Bonds (KTBs) higher, influencing other market interest rates as well. Furthermore, while corporate bond yields and financing costs for banks pick up, interest rates rise for both household loans and corporate loans.These results suggest that policymakers in Korea are faced with a difficult choice between price stability and financial conditions, as the Fed aggravates the burden of financing costs. Since price stability is also an urgent issue for Korea, Bank of Korea should maintain its current monetary policy stance focusing on disinflation. However, if jitters persist in the market by the Fed’s shock, stabilization measures needs to be implemented to cushion the blow.

Other Activities

Research
• 
US Structural Drivers of International Portfolio Returns (with I. So & E. Tong), North American Journal of Economics and Finance, 2023, vol. 64.
• Durable Consumption-Based Asset Pricing Model with Foreign Factors for the Korean Stock Market (with C.-K. Cho), International Journal of Financial Studies, 2023, 11(2):62.
• Stock Returns and Monetary Policy Stance (with I. So), International Review of Economics & Finance, Forthcoming.