Exploring Revenue Trends in Alley Commercial Areas in Seoul, Korea / Hongjai Rhee

This study examines changes in sales by business category and area in Korea’s small commercial districts. Unlike previous studies that focused primarily on overall sales levels before and after the COVID-19 pandemic, this paper emphasizes temporal variations in the inequality of sales distributions. Using credit-card-based data comprising 392,832 sales records aggregated by (category, area) units, the primary analysis reveals that sales distributions have recently become more dispersed across most categories, underscoring the vulnerability of less-advantaged areas in the post-pandemic period. In a secondary analysis, regression and machine learning models were applied to investigate factors influencing regional sales disparities. The findings indicate that although overall sales, which declined sharply during the pandemic, rebounded rapidly after 2021, they have shown a significant downturn in recent periods. The paper concludes with a discussion of relevant policy implications.

The Impact of External Uncertainty Shocks on the Korean Economy / Junhyong Kim

In this paper, we analyze the impact of external uncertainty shocks on the Korean economy, focusing on Russian geopolitical risks and U.S. monetary policy uncertainty. We find that increases in external uncertainties negatively affect the Korean macroeconomy, with a particularly pronounced impact on sectors highly dependent on external markets. Our micro-level analysis reveals that the effects of external uncertainties on exports vary across different countries and sectors. A firm-level analysis further suggests that Russian geopolitical risks primarily impact the economy through real friction, while U.S. monetary policy uncertainty affects it through both real and financial friction. By identifying multiple transmission channels through both a macro- and a micro-level analysis, we provide a comprehensive understanding of how uncertainty affects the real economy. Our findings could offer valuable insights for policymakers when responding to rapidly changing external conditions.

Structural Reforms to Enhance the Sustainability and Intergenerational Equity of the National Pension System / Kang Koo Lee

This paper examines reform measures for the National Pension System, analyzing their fiscal impacts. Despite past reforms adjusting contribution and replacement rates, the system faces ongoing sustainability challenges. We forecast that the reserve fund, peaking at 1,972.0 trillion KRW in 2039, will be depleted by 2054. A scenario analysis suggests that raising the contribution rate from 9% to 18% would extend solvency but not maintain long-term stability under the current DB structure, which promises benefits that exceed contributions. This highlights the difficulty of sustaining the fund through rate increases alone.
This paper proposes a structural shift to a new cohort-based DC system (“New Pension”), which would provide benefits based on contributions and investment returns, avoiding depletion even with low birth rates. Under this plan, the “Old Pension” deficit would be supported by government funds, ensuring all generations receive at least their contributions back. For the Old Pension, the shortfall is projected to be 609 trillion KRW if limited to contributions through 2023, rising to 869 trillion KRW if extended to 2028. These results stress the importance of early reforms to ease the fiscal burden.

Financial Projection of the Basic Pension under Selective Eligibility Criteria / Dohun Kim

This study conducts a financial projection of the basic pension in Korea, which provides cash assistance to the bottom 70% of elderly individuals aged 65 and over. The projection is carried out under both expansion and selective eligibility criteria, with particular emphasis on the latter. Specifically, the study examines two well-discussed selective eligibility criteria: 1) fixing the eligibility threshold at the 2024 value and adjusting it according to the inflation rate, and 2) linking the eligibility threshold to the median household income figure. To estimate the number of recipients under these selective scenarios, the study projects the future income evolution of the elderly, assuming the continuation of past income trends. Using the financial model of the basic pension developed by Shin and Kim (2021), the study finds that total fiscal spending could be reduced by 22% under the first selective scenario and by 17% under the second selective scenario, relative to the current system, in real terms between 2024 and 2070. With these fiscal savings, the study concludes that the full benefit amount could be increased from the current level of 334,810 won to 435,000 won under the first scenario and to 405,000 won under the second scenario by 2025.