02214cas a2200301 a 4500 AALejournalIMF021665 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513575223 1018-5941 BD-DhAAL BD-DhAAL Rafiq, Sohrab. What's in the R- Stars for Korea? / Sohrab Rafiq. Washington, D.C. : International Monetary Fund, 2021. 1 online resource (37 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Korea's stars tell of an economy saddled with a real neutral rate (r-star) that has declined significantly in recent decades and is currently below zero. This reflects a significant decline in trend growth, and two large financial crises that triggered significant shifts in the saving-investment balance. Larger fiscal deficits and frothy financial conditions since 2012 have helped offset rising demand for safer assets, preventing the neutral rate from falling further. Nonetheless, the fall in the neutral rate, coupled with its effects on asset returns, has complicated the task of monetary policy stabilization. Korea's neutral rate is likely to remain low over the medium-term and could fall further, reflecting a structural savings-investment imbalance owing to declining productivity and a rotation in demographics increasing the demand for precautionary saving and convenience yield, and widening the capital risk premia. The COVID pandemic risks magnifying these trends. Mode of access: Internet Convenience imf Monetary Policy, Central Banking, and The Supply Of Money imf Money and Interest Rates imf Neutral Rate imf Risk Premia imf IMF Working Papers; Working Paper ; No. 2021/093 Full text available on IMF http://elibrary.imf.org/view/journals/001/2021/093/001.2021.issue-093-en.xml IMF e-Library