2018.08.13 16:00 - 18:00
On August 13th, Korea Foundation for Advanced Studies hosted a Special Lecture entitled, “Ten Years after the Global Financial Crisis”, inviting Changyong Rhee, Director of Asia and Pacific Department at the IMF. It was his second lecture at Korea Foundation for Advanced Studies after he had first lecture on Chinese economy in 2016. Attended by more than two hundred people, the event included Dr. Rhee’s opinion on the lessons IMF learned from 2008 Global Financial Crisis and the implications they have.
Dr. Changyong Rhee argued that many social problems occurred since economic recovery after the Global Financial Crisis was slower than expected. Thus, he added, IMF started to consider social integration when implementing economic policies. According to him, the phenomenon of weakening social and widening income inequality is not a country’s unique problem but a universal problem since labor income share decreases around the world. In addition, he clarified that building up social security system does not mean protecting all jobs but signifies that the government should implement financial support policies for low-income groups that are most hard-hit in a short period of time.
He mentioned that the second change caused by the Global Financial Crisis is the criterion for judging national fiscal space. He also said that a number of countries adopted an expansive finance after the Global Financial Crisis, which exacerbated those countries’ national financial conditions. He emphasized that it is high time to reinstate finance. As regards Korean economy, Dr. Rhee mentioned that Korea is in good financial condition as the government has aimed at securing financial integrity but pointed out that the population of Korea is aging at an unprecedented rate, which leads to a massive increase in fiscal expenses. He stressed that therefore everybody has to pay more tax to secure social safety net. During the lecture, he mentioned several times about the need to prepare for a massive increase in fiscal expenses a decade from now.
Dr. Rhee stated that IMF learned the importance of policy coordination from the Global Financial Crisis. He explained that people changed their perspectives and became aware of the importance of consistent policy through coordination among financial policy, supervisory policy et cetera since central banks’ massive quantitative easing sustained lower interest rate and did not cause inflation after the Global Financial Crisis.
He argued that the world economy is slowly getting worse, whereas the growth rate of American economy is good. He mentioned that the size of fiscal expansion of Trump Administration is close to that of Johnson Administration during Vietnam War, which may be worrisome. He said that China has struggled to reduce liability and is now discussing the speed of restructuring due to trade dispute with the United States. He finished his lecture suggesting macroprudential policies for financial stability.
The lecture was followed by a discussion session with Prof. Chang-hyun Yoon of the University of Seoul, leading to an intense examination of various issues like minimum wage policy, real-estate policy, trade disputes et cetera. Especially when it comes to Korean government’s recent minimum wage increase, Dr. Rhee said that it is difficult to specify the effect as it has been implemented for less than a year. Nevertheless, he asserted that it is necessary to increase the minimum wage, to a greater or a lesser degree. Dr. Rhee pointed out that the government should primarily consider the purpose of a policy before its enforcement. With regard to recent trade disputes, he stated that the impact may differ depending on which countries are engaged in trade disputes, although it is evident there will be no winner in trade disputes. Lastly, he warned that Korean government should not be too immersed in political problems such as who would pay more taxes and which administration does better, but sho
RHEE Changyong, YUN Chang-Hyun