The crowding out effect and energy investments in South Korea.

Summary The purpose of this research is to find out whether or not energy investments after the oil shocks have caused the crowding out of industrial investments in South Korea. In this thesis, we have tried to establish a new methodology of crowding out analysis, showing the difference of crowding out analysis among Keynesians, monetarists, and French. The new methodology is characterized by the following two points: on the one hand, it is based on quantitative analysis, because the Korean financial system is a debt economy. On the other hand, it is based on the analysis of the volume effect and the price effect, because the definition of the crowding out effect is extended to the open economy. Based on these new economic methodologies, it could be concluded that the financing of energy investments has negatively influenced (in the sense of crowding out) the investments of the manufacturing sector, in particular, on the domestic market of medium and long term loans.