Unanticipated money,output, employment and prices in a develoing economy: the korean case

This paper examines the effect of unanticipated money on output, unemployment and prices in Korea. The empirical results tend to reject the policy ineffectiveness proposition (PIP) in most cases. They show that both anticipated and unantipated money affect output and prices, in contract with the PIP. Mixed results are obtained for the effect of monetary variables on unemployment. The statistical results show that the regular OLS two step estimates yield t values which are upward biases by 0–27% as compared with the consistent estimates of the variance-covariance matrix that are obtained in this study. E 51]