SUMMARYTechnology Standardization, Government Intervention, and Public Electronic Certificate in Korea (Yeongkwan Song)
Korea witnesses continued debate over the policy that mandates the use of the public authentication certificate (electronic certificate) in electronic financing. The debate mainly centers on the rationale of the government compelling, as a standard, a public electronic certificate based on a specific technology, among several user authentication technologies. This paper looks into the impacts of both adoption and abolition of this mandatory policy and thereby analyzes the effects of government intervention in technology standardization. To that end, two main questions are presented: what conditions would enable a single technology to serve as a standard in the market without government intervention; and what conditions would make the standard determined in the market contribute to maximizing social welfare. This paper demonstrates that the attitude and preference of market participants towards each technology determine the level of market equilibria and social welfare caused by the adoption and abolition of the mandatory policy on electronic certificate.
Korean Households’ Inflation Expectations and Information Rigidity (Hangyu Lee⋅Jinho Choi)
This paper attempts to investigate the Korean households’ inflation expectations with particular attention to information rigidity. For this purpose, we derive an empirical model from a sticky information model á la Mankiw and Reis (2002) and estimate it. In addition, it is also examined whether the expectation formation is state-dependent on macroeconomic conditions.
The main findings of this paper are as follows. First, it turns out that the information rigidity in Korean households’ inflation expectations is very high. In a month, most of the households simply keep their inflation expectations the same as before instead of updating them based on newly arrived information. Furthermore, when updating their expectations, the households tend to rely on the backward-looking information such as actual inflation rates in the past rather than on the forward-looking forecasts by experts. Second, it is found that the expectation formation is varying as inflation rate changes. Specifically, when the inflation is high, the sensitivity of the households’ inflation expectations to actual inflation increases and the gap between inflation expectations and actual inflation shrinks. It implies that Korean households update their expectations more frequently when the inflation matters than not.
The Impacts of Coeducation in High School on the College Scholastic Ability Test (Kim, Beomsoo⋅Kim, Ga-young)
Park et al. (2012) examined the impacts of coeducation in high school on the college scholastic ability test using random assignment in Seoul high schools. However, the student random assignment in Seoul within a school district was performed only within 30 min commutable areas using public transportation and Park et al. (2012) did not aware of this rule. This paper reexamines the question by matching nearest two single sex schools with a coeducation school within a school district. We found single sex school students achieve higher test score than that of coeducation school for both male and female. The magnitude of test score improvement for female is smaller than that of Park et al. (2012). However, the magnitude for male is bigger than that of Park et al. (2012).
Performance Analysis on Foreign-invested Firms in the SEZ (Yong-Seok Choi⋅Yeongkwan Song)
To attract more FDI inflows, the Korean government has designated several special economic zones (SEZs), offering various advantages and support to the FDI. There is, however, a shared acknowledgement that those efforts have gained little reward. In this regard, this paper empirically analyzes company-level performances of labor productivity, operating profit ratio, propensity to invest and innovate, etc. and then conducts regression analysis and PSM analysis to see whether these performances are meaningfully different between foreign-invested firm and domestic firm and between foreign-invested firms. The main findings of this paper are as follows. First, in the aspects of labor productivity and operating profit ratio, no empirical evidence was found to support the hypothesis that foreign- invested firm outperforms domestic firm in efficiency and profitability, Second, in the aspects of propensity to invest, foreign-invested firms in foreign investment zones outperformed domestic firms. Third, in the aspect of R&D investment, overall, foreign-invested firms showed a stronger propensity to invest than domestic firms, but there is no empirical evidence that high propensity to invest was driven by the policy on special economic zones. In the aspect of investment in educational training, empirical evidences were found that the role of foreign-invested firms outside the special zones turned out to be the strongest and that among firms inside special zones, it was those in the free economic zone that outperformed domestic firms. Lastly, foreign-invested firms showed a stronger propensity to employ than domestic firms, but there is no empirical evidence that high propensity to employ was driven by the policy on special economic zones.