Are Oil Price Hikes a Boon to the Korean Economy?, with Sangheon Ahn and Myungkyu Shim, accepted at the Korean Economic Review.
What Can We Learn about Carbon-Reducing Innovations from the Joint Dynamics of CO2 Emissions and GDP?, with Lilia Karnizova, forthcomoing in the Energy Journal. [On-line Appendix], [One-Page Executive Summary]
Does Economic Policy Uncertainty Differ from Other Uncertainty Measures? Replication of Baker, Bloom, and Davis (2016), with Siye Bae and Myungkyu Shim, Canadian Journal of Economics, 58 (1), February 2025, p.40-74.
Transmissions of Structural Oil Shocks to Core Prices, with Sangheon Ahn, Global Economic Review, 53, February 2024, p. 52-71.
Do Housing Markets Affect Local Consumer Prices? Evidence from US Cities, with CY Choi, [updated working paper version with online appendix], [Dallas Fed WP version], forthcoming in the Journal of Money, Credit and Banking.
United States of Mind under Uncertainty, with Siye Bae and Myungkyu Shim, Journal of Economic Behavior and Organization, 213, September 2023, p.102-127. [Mental Health Concerns Index 2004M01-2023M02]
Industry Effects of Oil Price Shocks: A Re-examination, with Lilia Karnizova and Abeer Reza, Energy Economics, 82, August 2019, p.179-190. [On-line Appendix]
Heterogeneity in the Dynamic Effects of Uncertainty on Investment, with Sung Je Byun, Canadian Journal of Economics, 51 (1), February 2018, p.127-155. [On-line Appendix]
Macroeconomic Uncertainty Through the Lens of Professional Forecasters, with Rodrigo Sekkel, Journal of Business & Economic Statistics, December 2017. [Not-for-Publication Appendix]
Macroeconomic Impacts of Oil Price Shocks in Asian Economies, with Juncal Cunado and Fernando Perez de Gracia, Energy Policy, 86, November 2015, p.867-879.
The Effect of Oil Price Uncertainty on Global Real Economic Activity, Journal of Money, Credit, and Banking, 46(6), September 2014, p.1113-1135. [On-line Appendix]
Economic Impacts of the Green Transition: Evidence from Korean Gas Stations, with Ian Choi, Jaehyeok Lee, and Myungkyu Shim, submitted.
The transition to a carbon-free economy presents challenges for industries dependent on conventional energy. This study investigates how expanding electric vehicle (EV) chargers influences fuel prices and gas station presence in South Korea. Leveraging a unique policy intervention mandating EV charger installations in apartments, we employ apartment units constructed before EV introduction as an instrument. We find that 100 additional chargers per city area lowered gasoline and diesel prices by 7.4\% and 8.7\%, respectively, from 2011 to 2023, without affecting gas station numbers. This suggests that EV charger expansion may inadvertently slow EV adoption by keeping fuel costs lower.
When News Isn't Just News: Partisan Affiliation and Inflation Expectations, with Jaemin Jeong and Myungkyu Shim, submitted.
This paper examines how political partisanship shapes inflation expectations through the perceived favorability of economic news, using micro-level data from the Michigan Survey of Consumers from 2006 to 2024. We find that partisanship systematically influences how individuals interpret the favorability of economic news, with supporters of the incumbent party consistently perceiving news more favorably than opponents. More importantly, supporters revise inflation expectations downward, neutralizing the influence of unfavorable economic news. These patterns emerge primarily between elections, whereas around elections, partisan bias dominates and news favorability has little impact. To understand our empirical findings, we present a theoretical model where agents Bayesian-update news with bias. Our findings highlight perceived news favorability as a key transmission channel for partisan differences in inflation expectations.
Let's Get Physical: Impacts of Climate Change Physical Risks on Local Employment, with Thibaut Duprey and Genevieve Vallee, [Bank of Canada SWP version], submitted.
We study the effects of natural disasters on provincial labour markets in Canada over four decades using a panel local projection framework. Disasters reduce hours worked within a week and lower real wage growth in the medium term, especially during periods of high labour market slack. These effects are partly driven by temporary business closures and reduced migration inflows. The adverse impacts have intensified over time, suggesting limited adaptation. Our findings highlight the need for policymakers to address the growing risks from disasters, particularly in regions with pre-existing economic vulnerabilities.
Extreme Temperature and Labor Market Heterogeneity: Regional Evidence from Korea, with Juntae Kim and Myungkyu Shim, submitted.
While the economic consequences of global warming have received growing attention, relatively little is known about how extreme temperatures affect labor market outcomes. This paper fills that gap by examining the impact of extreme temperature shocks on the Korean labor market using daily regional data from June 1999 to February 2024 and a panel local projection framework. Despite its relatively small geographic size, Korea exhibits substantial regional diversity in both climate and labor market conditions, providing a unique setting to study bidirectional temperature shocks within the same country. We find that, on average, extreme cold has a significantly negative effect on labor market indicators, while the effects of extreme heat are limited. Second, the impacts vary substantially by job characteristics and season, but not by key socio-demographic traits. Third, the labor market effects of extreme temperatures have become more negative in recent years, consistent with the progression of global warming.
ICT Innovations and Labor Hours: A Business Cycle Analysis, with Sangheon Ahn and Myungkyu Shim, R&R requested.
This paper examines the impact of changes in information and communication technologies (ICT) on skilled and unskilled labor at the business cycle frequency. To achieve this, we construct aggregate hours series for both labor groups using the monthly outgoing rotation group of the Current Population Survey from 1994 to 2022. Our empirical analysis, conducted with a structural vector autoregressive model, shows that the working hours of both groups respond positively to ICT innovations with similar magnitudes. We demonstrate that our findings are consistent with a dynamic stochastic general equilibrium model in which ICT capital complements both skilled and unskilled labor, and suggest a plausible range of elasticity of substitution between capital and labor. While this perspective contrasts with conventional literature which often posits that ICT capital primarily complements skilled labor, thereby explaining the long-term divergences in working hours between the two groups, our finding implies that skill-biased technologies may not be a primary contributing factor, at least at the business-cycle frequency.
Data: Working hours, wage and employment by skill level (Feb 2024 version)
Environmental Policy and Business Cycles: Long-Run Gain, Short-Run Pain?, with Sangheon Ahn, Kwang Hwan Kim, and Myungkyu Shim.
This paper examines the welfare cost of short-run fluctuations using a real business cycle model incorporating pollution and environmental policy; households derive utility from the quality of environment and firms pay green taxes to finance government expenditure for reducing pollution. We find that the taxation may result in short-run welfare gain, in addition to its long-run social improvement. Such short-run benefit of the environmental policies has not been documented in the previous literature. We further show that Ramsey taxation is more effective in mitigating the welfare cost.
Oil Price Uncertainty and Vehicle Purchase Decisions, with Aram Derdzyan.
Heightened uncertainty may cause consumers to recalculate optimal decisions, at the same time as stirring up searching activities to collect more information to resolve some of it. We use monthly micro-level vehicle sales data between 2005 and 2019 matched with fuel efficiency by make and model, and investigate how vehicle consumption is related to oil price uncertainty and consumers' information seeking behavior on gasoline prices. We find that vehicle sales decline significantly when oil price uncertainty rises. However, this decline in sales can be offset, as consumers' are actively seeking more information on gasoline prices.
Uncertainty and Labor Market Fluctuations, with Justin J. Lee. [Dallas Fed WP version]
We investigate how a macroeconomic uncertainty shock affects the labor market. We focus on the uncertainty transmission mechanism, for which we employ a set of worker flow indicators in addition to labor stock variables. We incorporate common labor factors from such indicators into a framework that can simultaneously estimate historical macroeconomic uncertainty and its impacts on the macroeconomy and labor market. We find firms defer hiring full-time workers as macroeconomic uncertainty intensifies the real options value of waiting, while switching to involuntary part-time workers that incur low adjustment costs. Moreover, significantly more workers are laid off and voluntary quits drop, suggesting that other mechanisms such as the aggregate demand channel also play a crucial role.
Rethinking the Effects of the Acid Rain Program: Was It Effective in Reducing Emissions in the Long Run?, with T. Terry Cheung, Jaerim Choi, Brian H. Shin, and Han Yang.
Economic Impacts of Carbon Reduction Policy: Analyzing Emission Permit Price Transmissions Using Macroeconometric Models, with Jehoon Lee, Environmental and Resource Economics Review, March 2024.
Has the Phillips Curve Flattened in South Korea?, with Kostiulin Maksim and Myungkyu Shim, Journal of Market Economy, June 2023.
The Consumption Behavior of Korean Households: Habit Formation vs. Durability, with Eun Young Chah, Korean Economic Studies, 2008.