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Relations between the U.S. and Korea—Trade and Finance

Relations between the U.S. and Korea—Trade and Finance. Jaewoo Lee (Research, IMF) The views expressed in this presentation are those of the author, and should not be attributed to the International Monetary Fund, its Executive Board, or its management. EER weights (IMF WP 05/99).

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Relations between the U.S. and Korea—Trade and Finance

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  1. Relations between the U.S. and Korea—Trade and Finance Jaewoo Lee (Research, IMF) The views expressed in this presentation are those of the author, and should not be attributed to the International Monetary Fund, its Executive Board, or its management.

  2. EER weights (IMF WP 05/99)

  3. Merchandise Trade Shares (Direction of Trade Statistics) • Rise of China’s share in the U.S. market • Rise of China’s share in Korean exports

  4. Merchandise Trade Balances(Direction of Trade Statistics) • In billion dollars • Surplus vis-à-vis the U.S. and China • Deficit vis-à-vis Japan

  5. Product Ladder • Eichengreen and Tong: China had positive DFI spillovers to neighboring countries. • Kim et al: China’s product mix has become similar to Korea’s. • Complementary vs. substitutable products • Likely to have a bigger change relative to China than the U.S.

  6. Financial Linkage via the U.S. • Chinn and Frenkel : Among Asian countries, interest parity via the U.S. • Kim et al. : Asian financial markets integrated better with the global market (including the U.S.) than regionally • Deutsche bank : China relies on the U.S. for some financial intermediation • Regional integration: Branson and Healy, and Gensberg et al.

  7. J. Pierpont Morgan, 1912 • Is not credit based upon the money? No, Sir. • It has no relation? No, Sir; none whatsoever...the first thing is character. • ..why do the banks demand,...a statement of what the man has got, before they extend him credit? That is what they go into, but the first thing they ask is “I want to see your record.” • A man I do not trust could not get money from me on all the bonds in Christendom.

  8. References • Tamim Bayoumi, Jaewoo Lee, and Sarma Jayanthi, “New Rates from New Weights”, IMF WP 05/99 • Direction of Trade Statistics, IMF. • Barry Eichengreen and Hui Tong, "The Impact of China's Growth and the Exports and FDI of Other Asian Countries“ • Joon-Kyung Kim, Yangseon Kim, and Chung H. Lee, "Trade, Investment, and Economic Integration between South Korea and China: A Step toward East Asian Regionalism“ • Menzie Chinn and Jeffrey Frenkel, “Financial Link around the Paficific Rim, 1982-1992” • Soyoung Kim, Jong-Wha Lee, and Kwanho Shin, “Regional and Global Financial Integration in East Asia”, mimeo, Korea University. • William Branson and Conor N. Healy, “Monetary and Exchange Rate Policy Coordination in ASEAN+1”, NBER WP. • 'Official Reserves and Currency Management in Asia: Myth, Reality and the Future', Hans Genberg, Robert McCauley, Yung Chul Park and Avinash Persaud, CEPR Series.

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