KOR

Research Staff

Research Staff

Kang, Hyunju SNS Senior Research Fellow Macro-Financial Analysis
Research Field

Profile

TEL
82-2-3771-0850
E-mail
hjkang326@kcmi.re.kr
Education
Ph.D., Economics, The Ohio State University, 2012
M.A., Economics, The Ohio State University, 2009
B.A, Economics, Seoul National University, 2003
Professional Experience
Research Fellow, Korea Capital Market Institute, 2012.8 onward
Graduate Teaching Associate, Department of Economics, OSU, 2008-2012
Economist, the Bank of Korea, 2003-2007

Publications

Opinion

Forecast and Implications of Neutral Real Interest Rates in Response to Economic Structural Transformation / Dec. 05, 2023
Amid concerns about the persistent high-interest rate environment in the US and other major economies, discussions in Korea, particularly led by the Bank of Korea, are underway regarding the potential decline in the neutral real interest rate caused by population aging. The aging population that entails a decrease in the working-age population contributes to reducing the demand for funds, while simultaneously increasing the supply of funds through the elderly’s excess savings, leading to a drop in the neutral real interest rate. Considering that the neutral real interest rate serves as a reference rate for monetary policy, its decline implies an inevitable policy shift towards lower interest rates. This article employs a model encompassing economic structural changes such as population aging to project the neutral real interest rate for Korea and the US. Analysis findings indicate a potential rebound in the US neutral real interest rate, driven by improvements in productivity and an expansion of government debt, whereas the neutral real interest rate in Korea is anticipated to remain at low levels without remarkable changes. This result could suggest that the sharp decline in economic growth driven by population aging may narrow the difference between growth rates and the neutral real interest rate, which casts doubt on the long-term sustainability of government debt. Furthermore, the potential structural inversion of domestic and foreign interest rate differentials implies that Korea’s monetary independence may be limited by central banks of major economies. This can also pose a challenge for Korean monetary authorities in implementing policy responses to secular stagflation.
Declining Interest Rate Sensitivity of the US Real Economy and its Implications / Jun. 27, 2023
Despite the Fed’s steep rate hikes in response to unprecedented inflation, the US economy remains in good shape and its growth prospects are being revised up. This article analyzes the interest rate sensitivity of the real economy by applying various economic analysis methodologies. The analysis finds that the interest rate sensitivity of the US real economy has declined considerably. Improvement in the conduct of monetary policy, financial innovation and deregulation, and supply-side structural shifts have been pointed out as contributors to less interest rate sensitivity. In this respect, it should be noted that a decline in the interest rate sensitivity of the real economy may increase uncertainty over the estimation of the neutral real interest rate, which serves as a reference for monetary policy, and the high-price, high-interest rate environment may have a prolonged impact.
Korea’s Population Aging: Relevant Risks and Long-term Economic Growth / Dec. 20, 2022
Recently, a decline in fertility has deepened concerns over demographic structure. From a broader demographic perspective, aging baby boomers have caused equally serious problems. The baby boom generation represents a sizable share of the entire population and lower fertility rates have had a cumulative impact since the 2000s. Given these circumstances, even a dramatic increase in fertility hardly seems to change the expected course of demographic transition. Furthermore, as East Asian countries including China are seeing the advent of an aging society around the same time, it is hard to expect an influx of immigrants to buffer the effects of demographic aging. This suggests that population aging is a predetermined future, rather than a probabilistic projection. Some previous studies have found intensifying population aging responsible for sluggish economic growth. Considering its rapid aging trend, Korea would be far more influenced by an aging population, compared to other gradually aging OECD countries. As a response, the policy direction should be geared toward alleviating the adverse effects of rapid population aging and facilitating swift adaptation to the demographic shift.
Causes behind Rising US Long-term Interest Rates and Possible Shift in Lower for Longer / Apr. 07, 2021
The causes behind the sharp rise in US long-term Treasury yields this year could stem from the upward adjustment in inflation and growth projections in line with large-scale fiscal expansion. However, this round of fiscal expansion, despite its sheer scale, is largely a one-off transfer payment, which is found to have no significant impact on the nominal neutral interest rate and long-term inflation expectations. This implies market participants perceiving the recent yield change as a cyclical increase, instead of a shift in the low interest rate stance. However, Korea’s interest rate is strongly in sync with the US Treasury yields amid the looming expectation for Fed tapering. This reinforces the need for Korea’s financial investment industry to ramp up its risk management bracing for interest rate increases in the short-run, and to prepare for a possibility of the lingering low interest rate due to structural factors in the long-run.

Seminar Presentation

관련 세미나 이미지
2019 May 28
Economic and Capital Market Outlook for 2H 2019 (Korean)
  • Presenter Senior Research Fellow Kang, Hyunju and others
관련 세미나 이미지
2016 Jan 20
Outlook for the Global and Korean Economy (Korean)
  • Presenter Senior Research Fellow Kang, Hyunju
관련 세미나 이미지
2015 Jan 26
Outlook for the Global and Domestic Economy (Korean)
  • Presenter Senior Research Fellow Kang, Hyunju
관련 세미나 이미지
2014 Jan 15
Global Financial Market Trends and Outlook (Korean)
  • Presenter Senior Research Fellow Kang, Hyunju

Research performance

  • ■ Analysis of foreign investors' investment behavior in the government bond market and its implications, with Hyosub Lee, Ministry of Strategy and Finance, September 2019
  • ■ A Study on introducing electronic trade platform for OTC derivative markets in Korea, with Hyosub Lee, Financial Services Commision, October 2017
■ Legal system for market order in foreign exchange transaction, with Seungho Lee, Hansoo Kim, Hyunsoo Joo and Jeungeun Lee, Ministry of Strategy and Finance, February 2017
■ Monetary policy in major advanced economies since the global financial crisis and lesson for the Korean economy, with Seungho Lee and Hyunsoo Joo, National Economic Advisory Council, December 2016
■ Establishment of AMBIF (ASEAN +3 Mutil-currency Bond Issuance Framework) and policy plan, Suk Hyun and Jin Young Yang, Ministry of Strategy and Finance, November 2015
■ Capital market ecosystem establishment to facilitate creative economy, with Yong Rin Park, Changmin Chun, Jongmin Kim and Joon-Seok Kim, Office of the President, December 2014
■ Promotion strategy for Chinese yuan-denominated bond market in Korea, with Yuhua Ahn and Sehoon Hwang, Korea Securities Depository, October 2014
■ Foreign exchange market advancement plan, with Seungho Lee and Hyunsoo Joo, Ministry of Strategy and Finance, July 2014
■ Financial cooperation in APEC (Asia-Pacific Economic Cooperation): evaluation and new agenda, with Hansoo Kim, Seungho Lee and Jongmin Kim, Ministry of Strategy and Finance, July 2013
Maritime finance and its development plan, with Yongwoo Lee and Seungbok Lee, National Assembly, December 2012

Other Activities

Peer-reviewed journal articles
  • ■ The Rise of Part-time Employment in the Great Recession: Its Causes and Macroeconomic Effects, with Jaevin Park and Hyunduk Suh,   Journal of Macroeconomics 66(C), 2020.
  • ■ Does Air Pollution Affect Consumption Behavior? Evidence from Korean Retail Sales, with Hyunduk Suh and Jongmin Yu,  Asian Economic Journal 33(3), 2019.
  • ■ The Time-Varying Impact of China's Economic Rebalancing on Koreas Exports to China, International Economic Journal, vol.32(1), 2018 
  • ■ Macroeconomic Dynamics in Korea during and after Global Financial Crisis: A Bayesian DSGE Approach, with Hyunduk Suh, International Review of Economics & Finance, vol.49, May 2017 
■ Global liquidity and commodity prices, with Bok-Keun Yu and Jongmin Yu, Review of International Economics, vol.24(1), February 2016 
■ Reverse spillover: evidence during emerging market financial turmoil in 2013-2014, with Hyunduk Suh, Journal of International Financial Markets, Institutions & Money, vol.38, September 2015 
■ Currency invoicing and state-dependent pricing, Journal of Macroeconomics, vol.44, June 2015 
■ Behind the scenes of abandoning a fixed exchange rate regime, Journal of Banking & Finance, vol.37(8), August 2013