Abstract
The purpose of this paper is to examine the relationship between macroeconomic stability/instability and the "structural reform" by Kim DaeJung after the financial crisis, by constructing a novel theoretical framework. As far as the theoretical framework is concerned, we try to combine, on one hand, "Transformational Growth Theory" by E. J. Nell on the pattern of business cycle and macroeconomic stability, and, on the other hand, "Regulation Theory" on the institutional forms like wage-labour nexus. The empirical part of this paper explores the impact of institutional change in Korean economy after 1997 in relation to the macroeconomic stability. Especially, we show that, by analyzing the change in the pattern of the business cycle, the change in the patterns of price and wage-coordination enhances the real macroeconomic instability. The stagnant consumption demand since the "structural reform" can be interpreted as an expression of this instability.
