Abstract
This paper has three objectives. First, it examines the link between the term spread (difference between long-term and short-term rate of interest) and GDP growth in the Korean economy for the period 1980–1999. Second, it tests for the independent information content of the term spread by including current and expected monetary policy indicators. Third, it explores the usefulness of the spread as a leading indicator of recessions and poses the question, was the crisis of 1997–1998 predictable?
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