{
  "title": "Monetary–Fiscal Policy Interactions in Korea: A QPM-Based Analysis",
  "publication": "IMF Working Papers, August 14, 2026",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2026/08/14/monetaryfiscal-policy-interactions-in-korea-a-qpm-based-analysis-578460",
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  "summary": "This paper develops a quarterly projection model for Korea with an integrated fiscal block, enabling analysis of monetary-fiscal interactions. The model is validated through historical decompositions and forecast evaluation.",
  "sections": [
    {
      "heading": "Model and validation",
      "content": "- Develops a quarterly projection model for Korea with an integrated fiscal block to analyze monetary–fiscal interactions.\n- Model validation approaches:\n  - Historical decompositions.\n  - Forecast evaluation."
    },
    {
      "heading": "Core findings from scenario analysis",
      "content": "- Debt-stabilizing fiscal rules versus no-rules comparison:\n  - Rules generate short-run procyclicality.\n  - Rules prevent permanent debt drift.\n  - Without rules, temporary nominal GDP movements cause lasting debt-to-GDP changes.\n- For Korea:\n  - Facing age-related spending pressures, a medium-term fiscal framework could safeguard sustainability."
    },
    {
      "heading": "Key themes and mechanisms",
      "content": "- Interaction channels emphasized:\n  - Monetary policy shocks and monetary–fiscal interactions.\n  - Impact of temporary nominal GDP movements on public debt dynamics.\n  - Role of fiscal anchors and fiscal rules in stabilizing debt-to-GDP.\n- Relevant shocks and factors considered:\n  - Supply shock.\n  - Energy inflation.\n  - Exchange rates.\n  - Output gap and inflation dynamics."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Implementing debt-stabilizing fiscal rules:\n  - Trade-off: accept short-run procyclicality to avoid permanent debt drift.\n  - Support for a medium-term fiscal framework in Korea to address age-related spending pressures and safeguard debt sustainability.\n- Importance of integrating fiscal considerations into macroeconomic projection models to capture monetary–fiscal feedbacks.\n\nMonetary–Fiscal Policy Interactions in Korea: A QPM-Based Analysis, by Alexander Borodin, Matteo Ghilardi, Tommy Lee, Victoria Petrenko; August 14, 2026.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2026/08/14/monetaryfiscal-policy-interactions-in-korea-a-qpm-based-analysis-578460"
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    "Authors: Alexander Borodin, Matteo Ghilardi, Tommy Lee, Victoria Petrenko",
    "Published: August 14, 2026",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229056519.001",
    "Develops a quarterly projection model for Korea with an integrated fiscal block to analyze monetary–fiscal interactions.",
    "Model validation approaches:",
    "Debt-stabilizing fiscal rules versus no-rules comparison:",
    "For Korea:",
    "Interaction channels emphasized:",
    "Relevant shocks and factors considered:",
    "Implementing debt-stabilizing fiscal rules:",
    "Importance of integrating fiscal considerations into macroeconomic projection models to capture monetary–fiscal feedbacks.",
    "**Working Paper**"
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