This comes as a result of not just the high real estate prices and heavy private spending on education, but also an endemic climate of confrontation between labor and management and the influence of vested interest groups. Meanwhile, in stark contrast, manufacturing productivity growth in Korea has been no more than one half that of China since the late 1980s.
In this respect, the paper by Wiederholt (2015), argues that forward guidance is less powerful when agents have dispersed information. Coenen and Warne (2014), using the New Area Wide Model (NAWM) developed at the ECB, show that with nominal interest rates at the ZLB forward guidance can mitigate the downside risks to price stability.