total corporate debt, consisting of total bank debt, foreign debt, and debt owed|
to insurance and trust companies (ESYB).
|6.||d =||dividends, from national income accounts (ESYB).|
|7.||ρ =||annual average yield on stocks traded on the Korea Stock Exchange (ESYB).|
interest rate on commercial bank loans for machines, industry, and promotion|
|9.||τ =||corporate income-tax rate constructed from data obtained from ESYB.|
capital stock, constructed by means of the perpetual inventory method,|
Kt = It + (1 - δ)Kt-1, where the average depreciation δ is estimated to be 8 per-
cent per annum using the straight-line depreciation rule based on the average
lifetime of 35 years for structures and 15 years for machinery and equipment.
cyclical fluctuation of real aggregate output constructed as the deviation of real|
GDP from its long-term trend.
I would like to thank Indermit Gill, Mohsin Khan, Ashok Lahiri, and Sweder Van Wijnbergen for helpful comments and suggestions, and Boubker Abisourour for research assistance.
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