Contract Type Selection in Korea’s Large-Scale Retail Sector / JINKOOK LEE, Myeongsik Seo

“Using firm-level data on 7,000 suppliers transacting with 26 major South Korean retailers, this study analyzes how contract types, referring to direct purchase, special contract, consignment, and store lease types, are determined and how they affect supplier performance. Contract choice varies systematically by retail format and product category, shaped by transaction costs and asset specificity. Regression results show that direct purchases are positively associated with advanced retailer procurement systems, high supplier trust in the retailer, and stronger supplier bargaining power, while special contracts are more prevalent when supplier-specific investments are required. Instrumental variable estimates indicate that a 1 percentage point increase in the special contract share reduces supplier revenue by approximately KRW 259 million. Regulatory enforcement data reveal that over 75% of unfair trade practices occur in direct and special contract transactions, with special contracts showing the highest violation rate per transaction. These findings suggest that contract type is a key channel through which bargaining asymmetries affect economic outcomes. Policy implications include enhancing supplier bargaining power and improving the oversight of contract-specific risks.”


On the Effects of National Debt on the Distribution of Household Assets / SEUNG-RYONG SHIN

This study examines the long-term effects of higher national debt in South Korea on asset distribution. Using an overlapping generations general equilibrium model, we focus on two key channels: rising interest rates and falling wage rates, both driven by the crowding-out effect of capital. Higher interest rates increase asset dispersion, benefiting older groups with more accumulated assets, while younger groups with fewer assets gain less. Falling wage rates reduce the capacity to save money across all age groups, partially offsetting the dispersion effects of higher interest rates. A simulation of a 50% increase in national debt reveals a decline in the Gini coefficient of asset holdings, driven by the diminishing marginal increase in future assets relative to current holdings. However, widening cross-sectional dispersion proved more welfare-relevant: older age groups, which experienced greater gains in average assets, saw increases in average welfare, whereas early life-cycle cohorts with low asset levels experienced welfare losses. Given this trade-off associated with higher national debt, initial asset transfers as a counteracting measure can enhance lifetime welfare overall, mitigate the rising asset dispersion, and improve the asset Gini coefficient.


The Macroeconomic Effects of Structural Oil Price Shocks: An International GVAR Analysis / SORA CHON

This paper investigates the macroeconomic impacts of structural oil price shocks by employing a Global Vector Autoregression (GVAR) framework, utilizing the structural shocks as identified by Baumeister and Hamilton (2019). Our analysis differentiates among three types of oil shocks: economic activity shocks caused by fluctuations in global demand, oil supply shocks driven by production disruptions, and oil inventory demand shocks linked to shifts in market expectations about future supply-demand imbalances. Empirical findings indicate that the macroeconomic consequences of these shocks differ depending on their underlying sources and related structural characteristics. In oil-importing countries such as Korea and China, oil supply disruptions and inventory-related shocks generally exert negative short-term effects on economic activity due to increased import costs and uncertainty-driven price volatility. Conversely, oil-exporting countries such as Canada and the United States respond differently, benefiting from increased export opportunities associated with higher oil prices. Overall, the study emphasizes the critical importance of distinguishing the structural causes of oil price fluctuations, highlighting how the indirect transmission of these shocks through international economic linkages significantly influences domestic macroeconomic performance outcomes. The results provide important implications for policymakers, underscoring the necessity of tailored policy responses to mitigate macroeconomic risks arising from energy transitions and geopolitical uncertainties.


Efficiency Effects of Regulations on Unfair Subcontracting Behaviors / YONG HYEON YANG

This paper investigates the efficiency effects of governing vertical relationships by analyzing the incentives of firms to engage in exclusive contracts. In particular, the analysis focuses on the subcontracting context. When a downstream firm possesses a superior bargaining position, upstream subcontractors do not prefer an exclusive contract, even when it is efficient, as such a contract lowers their bargaining power even further, ultimately leading to lower profits. It can therefore enhance efficiency to encourage upstream firms to engage in an exclusive contract by limiting bargaining power abuses by superior downstream firms. The paper discusses the required flexibility of such a regulation as well as the evaluation of the current regulation based on the analysis.


Sharing Economic Rents with Workers? Evidence from Matched Employer-Employee Data in Vietnam / NOBUAKI YAMASHITA

Utilising matched employer-employee data from Vietnamese small and medium enterprises (SMEs) surveys spanning the time frame of 2007-2015, we investigate the extent to which firms share economic rents with their employees through wage adjustments. Our analysis reveals rent-sharing elasticity of 0.08-0.1, demonstrating that small firms with limited market power engage in rent sharing in response to increased economic rents, measured as value added per employee. This rent sharing is prominent if a worker is related to an owner and is engaged in non-production jobs. However, the analysis based on worker panel data indicates caution against interpreting the results as causal evidence.