Yun Young Gwak

Current Working Papers 

"Sectoral Spillovers and Inflation Dynamics: Evidence from Network Propagation"  (Under review; Accepted at WAMS+LAEF 2025 & OzMac 2025; Presented to MIG)

Distinguishing between sector-specific and aggregate shocks and assessing their contributions to inflation are vital for informed policy. This paper quantifies cross-sectoral spillovers in inflation dynamics using a factor-adjusted network approach that jointly models common factors and sectoral propagation dynamics. Applied to disaggregated U.S. personal consumption expenditure data across 26 sectors from 1959-2024, the methodology employs Lasso nuclear norm regularization to estimate high-dimensional VAR systems while controlling for aggregate influences. Results show that cross-sectoral spillovers account for 39.9% of total price variation—a transmission mechanism larger than aggregate factors (17%) in driving price dynamics. The baseline model avoids systematic biases affecting conventional approaches: pure VAR models overestimate spillovers (56.9%) by conflating aggregate comovements with direct transmission, while factor-augmented VAR models underestimate spillovers (19.4%) by assuming independent sectoral dynamics. Food, furnishings, and service-related sectors emerge as key net transmitters, while gasoline exhibits moderate but notably persistent net transmission despite its limited overall spillover capacity, remaining influential even over 8- to 16-quarter horizons. Comparison with conventional models highlights the importance of jointly modeling sectoral networks and aggregate factors to capture spillovers, with implications for policy design. 

"Financial Shocks and Inflation Expectations: Implications for Modern Central Banking" (with Thuy Hang Duong) (Accepted at WiM 2025)

This paper investigates the impact of financial conditions on inflation expectations, with a particular focus on the evolving mandates of central banks since the global financial crisis. As institutions increasingly incorporate financial stability alongside price stability, understanding the interplay between these objectives becomes critical. We seek to answer: How responsive are expectations to financial shocks? And how do monetary policy and financial conditions interact? Using state-dependent local projection methods combined with Kitagawa-Blinder-Oaxaca decompositions, we aim to quantify the marginal effects of financial shocks on inflation expectations, conditional on monetary-financial interactions. The findings will inform whether central banks should more explicitly consider financial conditions in their efforts to manage inflation dynamics.

Other Works in Progress  

"Global Inflation: Exogenous Shocks and Policy Spillovers"  (with James Morley & Benjamin Wong) 

What causes global inflation and what can monetary policy do about it? This project addresses this fundamental question by examining how global forces shape inflation and exploring their implications for domestic monetary policy in open economies. This study has two aims: (1) to quantify the extent to which global forces influence inflation across countries and (2) to understand how monetary policy should respond to these global forces. The primary focus is on the first aim, employing econometric methods to identify and establish causal links between global influences and inflation dynamics. The secondary aim, concerning policy responses, is explored with less emphasis but remains critical in interpreting the results, especially given the recent synchronization of policy rates across central banks worldwide. 

Sectoral Phillips Curves  (with Qingyuan Du & Benjamin Wong)   

Academic experience (T&R)  

Teaching

• Intermediate Macroeconomics, 2024 S1-S2, 2025 S1-S2, Teaching Assistant to Prof Moshe Hazan and Prof Siew Ling Yew  (teaching evaluation)

• Macroeconometrics, 2024 S2, Mentor for Economics Pre-PhD and Honours students  (teaching evaluation not issued)

• Development Economics, Korean Economy, 2022 S2, Teaching Assistant to Prof Doowon Lee  (teaching evaluation not issued)

Research 

• "How important is global r-star for open economies?," Sep 2025-, Research Assistant to Prof Benjamin Wong 

• "Trade Restrictiveness Indices and Non-Tariff Measures," Apr 2025-, Research Assistant to Prof Laura Puzzello

• "Implications of Global forces for Domestic Monetary Policy," Jan-Jun 2024, Research Assistant to Prof Benjamin Wong 

Professional experience, Bank of Korea  

• Economic Research Institute, Financial and Monetary Research Team, 2022

• Research Department, U.S. and Europe Economies Team, Economic Analysis Team, 2020-2022

• International Affairs Department, Regional Organizations Team, 2018-2020

Research at Bank of Korea - working papers

• Park, S., Gwak, Y. and Hwang, N. (2022), "Constraints on the Recovery of Construction Investment: Causes and Effects of Surge in Construction Material Prices," BOK Issue Note 2022-14. https://bit.ly/3Z1XZ8y 

• Park, K., Park, J., Park, S., Lim, J., Kim, C., Lee, J. and Gwak, Y. (2021), "The Macroeconomic Impact of Climate Change Responses” BOK Issue note, 2021-23. https://bit.ly/4fFs46c 

• Lee, K., Gwak, B. and Gwak, Y. (2021), “Fiscal Policies of the Biden Administration,” BOK International Economics Review, 2021-3. https://bit.ly/3kcjoNn   

• Gwak, B. and Gwak, Y. (2021), "Growth differences in the Euro Area after COVID-19," BOK International Economics Review, 2021-1. https://bit.ly/3IeC1bA   

• Gwak, B., Lee, K., Gwak, Y., Kang, B. and Oh, K. (2020), "Unemployment policies in major countries after COVID-19," BOK International Economics Review, 2020-35. https://bit.ly/3lRoa3p   

• Lee, G., Oh, K., Kang, B. and Gwak, Y. (2020), “Evaluating corporate risks after COVID-19,” BOK International Economics Review, 2020-22. https://bit.ly/3Izqyoh  

Honours and Awards  

• Dean's Excellence Award: Unit Prize in Advanced Topics in Microeconomics, 2024

• Monash Graduate Scholarship, Monash International Tuition Scholarship, 2024-2027

• Monash Scholarship for Excellence, 2023

• Graduate TA Scholarship, Yonsei University, 2022

• Summa Cum Laude, Sogang University, 2016

• Honors Scholarships, Sogang University, 2013-2015