Finding Loopholes in Sanctions: Effects of Sanctions on North Korea’s Refined Oil Prices / KYOOCHUL KIM

The international community’s sanctions against North Korea, triggered by North Korea’s nuclear tests and by missile development in the country, are considered the strongest sanctions in history, banning exports of North Korea’s major items and limiting imports of machinery and oil products. Accordingly, North Korea’s trade volume decreased to the level of collapse after the sanctions, meaning that the sanctions against North Korea were considered to be effective. However, according to this paper, which analyzed the price fluctuations of refined petroleum products in North Korea through the methodology of an event study, the market prices of oil products were only temporarily affected by the sanctions and remained stable over the long run despite the restrictions on the volumes of refined petroleum products introduced. This can be explained by evidence that North Korea has introduced refined oil supplies that are not much different from those before the sanctions through its use of illegal transshipments even after the sanctions. With regard to strategic materials such as refined oil, the North Korean authorities are believed to be desperately avoiding sanctions by, for instance, finding loopholes in the sanctions to meet the minimum level of demand.

Immigration to Korea: A Fiscal Boon or Burden? / JINWOOK HUR

This paper intends to examine the extent of the fiscal contribution of immigrants to Korea. According to this analysis, the aim is to derive implications pertaining to the direction of Korea’s immigration policy as a response to fiscal problems caused by population aging. For this purpose, a macroeconomic model is designed to measure the lifetime net fiscal contribution of immigrants in Korea by visa type, age, and other characteristics. According to this analysis, the sum of the lifetime fiscal contribution for all immigrants in Korea is negative. This implies that immigration policy reforms that increase the inflow size while maintaining the current structure of the foreign population characteristics can rather worsen Korea’s fiscal problems. This finding suggests that immigration policy reform may exacerbate Korea’s fiscal soundness if it simply targets the maintenance of the numerical balance of the demographic structure.

Effects of US Monetary Policy on Gross Capital Flows: Cases in Korea / WOO JIN CHOI

U.S. monetary policy has been claimed to generate global spillover and to destabilize other small open economies. We analyze the effects of certain identified U.S. monetary shocks on gross capital flows in the Korean economy using the local projection method. Consistent with previous results on other small open economies, we initially confirm that U.S. interest rate hikes are dynamically correlated with foreign outflows and residents’ inflows. That is, not only are they correlated with withdrawals by foreigners but they are also correlated with those by domestic (Korean) investors. The results are mostly driven by portfolio flows. Second, however, the marginal response to a U.S. monetary policy shock is, on average, subdued if we focus on the sample periods after the Global financial crisis of 2007-2008 (henceforth, global financial crisis). We conjecture a possible reason behind the change, an institutional change related to financial friction. If the degree of pledgeability of the value of net worth increases, the marginal responses by both investors would drop with a U.S. monetary policy shock, consistent with our findings.

Trick or Treat? Equity Concerns in the Preliminary Feasibility Study of the Republic of Korea / JONGYEARN LEE

As a project appraisal tool, the preliminary feasibility study (PFS) has contributed to enhancing the efficiency of public investment decision-making in the Republic of Korea over the last two decades. To overcome the limitations of the efficiency-oriented cost-benefit analysis, the PFS accommodates equity concerns among regions, namely balanced regional development (BRD) analysis. This study attempts to gauge the contributions of BRD analysis to PFS results. Specifically, it addresses how effectively policy efforts to promote decision-making have been implemented in the PFS stage while also considering the balance between equity and efficiency in terms of the trade-off between them, the degree to which they influence the results, and whether the consideration of equity is in fact actually reflected in seriously underdeveloped regions as intended. The study finds that the PFS results over the last two decades have been largely in line with the background and policy objectives. Based on the findings of the study, needs for institutional improvement are suggested, including enhancements in the analysis of regional economic ripple effects and taking into account the psychological factors pertaining to the evaluators in the overall judgment.

Robust Contract Conditions Under the Newly Introduced BTO-rs Scheme: Application to an Urban Railway Project / KANGSOO KIM

Few studies have specifically focused on the uncertainty of demand forecasting despite the fact that uncertainty is the one of greatest risks for governments and private partners in PPP projects. This study presents a methodology for finding robust contract conditions considering uncertainty in travel demand forecasting in a PPP project. Through a case study of an urban railway PPP project in Korea, this study uncovered the risk of excessive government payments to private partners due to the uncertainty in contracted forecast ridership levels. The results allow the suggestion that robust contract conditions could reduce the expected total level of government payments and lower user fees while maintaining profitability of the project. This study offers a framework that assists contract negotiators and gives them more information regarding financial risks and vulnerabilities and helps them to quantify the likelihood of these vulnerabilities coming into play during PPP projects.

Finding Loopholes in Sanctions: Effects of Sanctions on North Korea’s Refined Oil Prices / KYOOCHUL KIM
　Ⅰ. Introduction
　Ⅱ. Literature Review
　Ⅲ. Background of Sanctions on North Korea
　Ⅳ. Data
　Ⅴ. Empirical Analysis
　Ⅵ. Discussion of the limited impact of sanctions
　Ⅶ. Conclusion
　REFERENCES

Immigration to Korea: A Fiscal Boon or Burden? / JINWOOK HUR
　Ⅰ. Introduction
　Ⅱ. Immigration Policy and Major Visa Types of Korea
　Ⅲ. Model
　Ⅳ. Calibration
　Ⅴ. Results of Equilibrium Analysis
　Ⅵ. Concluding Remarks
　REFERENCES

Effects of US Monetary Policy on Gross Capital Flows: Cases in Korea / WOO JIN CHOI
　Ⅰ. Introduction
　Ⅱ. Literature
　Ⅲ. Data and the Econometric Methodology
　Ⅳ. Empirical Results
　Ⅴ. Financial Friction and the Elasticity of Capital Flows
　Ⅵ. Conclusion
　APPENDIX
　REFERENCES

Trick or Treat? Equity Concerns in the Preliminary Feasibility Study of the Republic of Korea / JONGYEARN LEE
　Ⅰ. Introduction
　Ⅱ. Overview of the BRD Analysis in the PFS
　Ⅲ. Evaluating the Effectiveness of the BRD Analysis in the PFS
　Ⅳ. Policy Implications and Suggestions
　REFERENCES

Robust Contract Conditions Under the Newly Introduced BTO-rs Scheme: Application to an Urban Railway Project / KANGSOO KIM
　Ⅰ. Introduction
　Ⅱ. Related Literature
　Ⅲ. Built-Transfer-Operation (BTO)-rs scheme
　Ⅳ. Case Study: Urban Railway PPP Project
　Ⅴ. Optimal Contract Conditions under the BTO-rs scheme
　Ⅵ. Robust Optimal Contract Conditions
　Ⅶ. Summary and Conclusion
　REFERENCES