• The Journal of Asian Finance, Economics and Business
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• 제9권6호
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• pp.245-252
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• 2022

This study examines the strength of the impact of fiscal policy tools on economic wellbeing as measured by per capita income in Malaysia from 1996 to 2020. The impact of fiscal policy instruments on economic wellness, represented by real income per capita, is measured using the autoregressive distributed lags model. The speed of adjustment from short-run disequilibrium to long-run equilibrium is also measured to assess the strength of the fiscal instruments' impact on per capita income. Empirical results exhibit the existence of co-integration relationships between per capita income, tax revenue, and government spending. The findings provide strong support for the presence of a long-run positive impact on government spending and a long-run negative impact of tax revenue on per capita income. The coefficient of ECT_t-1 indicates that deviations from a short-run disequilibrium to a long-run equilibrium from the current to the future period are corrected with a speed of 76% (equivalent to a duration of 1.5-2 years to return to equilibrium). The practical and policy implication of the results is fiscal instruments play a significant role, mainly in alleviating the economic impact of the COVID-19 pandemic in the long run.

• Asian Journal of Business Environment
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• 제9권4호
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• pp.23-28
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• 2019

Purpose - With rapid population aging in Korea, changes in the population structure will result in a rise in the fiscal burden. This paper investigates the effects of population aging on fiscal spending based on Korea's province data and country panel data from the OECD. Research design, data, and methodology - We use province-level fiscal data from Local Finance Integrated Open System and the Korean Statistical Information Service and also collect country panel data from the OECD. To investigate the relationship between population aging and fiscal expenditures, our analysis uses the fixed effects model. Results - The empirical analysis based on Korean local finance and country panel data show that population aging has a positive impact on social welfare expenditures and it also has a positive impact on spending related to children and the elderly, implying that population aging may lead to an increase in fiscal spending via an increase in social welfare expenditures and spending related to children and the elderly. Conclusion - These empirical results suggest that countries like Korea that expect to experience rapid population aging need to pay more attention to prepare for the expected increase in age-related spending in the near future.

• Journal of Contemporary Eastern Asia
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• 제16권1호
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• pp.93-113
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• 2017

This study aimed to determine the changes in the local fiscal structure brought about by the change in the transaction tax, including the acquisition tax, by the central government. The review of the analysis results proved the following. First, the government's transaction tax exemption policy effectively influenced the expansion of the local fiscal budget. Transaction tax exemptions such as acquisition tax exemptions would not contribute to the expansion of the local fiscal budget in the short run, but may do so in the long run. Second, the review of the effect of the transaction tax exemption policy by the central government on the local fiscal structure confirmed that its impact on the local fiscal structure may vary depending on the timing of such tax exemption. Third, the overall local fiscal structure as a result of the transaction tax exemption by the central government was confirmed to have been influenced more by the fiscal capability of the local government than by the income level of the local residents. In conclusion, the stimulation of real estate transactions using tax tools may positively influence the overall fiscal structure of local governments, but it would also put pressure on the fiscal management of local governments because it is largely influenced by the fiscal capability of the local governments.

• 한국컴퓨터정보학회논문지
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• 제29권1호
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• pp.241-249
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• 2024

본 연구는 의무교육에 대한 재정지출의 효율성에 미치는 영향 요인을 분석하고 있다. 중국의 의무교육도 다른 국가와 마찬가지로 주로 재정지출에 의존하고 있다. 본 연구는 우선 2006-2021년 기간 동안 중국의 31개 지역을 대상으로 의무교육에 대한 재정지출의 효율성을 추계한다. 의무교육에 대한 재정지출의 효율성은 지역경제발전 수준이 상대적으로 높은 지역이 오히려 낮게 나타나고 있으며, 지역경제발전 수준이 상대적으로 낮은 지역의 효율성이 높게 나타나고 있다. 그리고 효율성을 종속변수로 설정하고 1인당 GDP, 재정자립도, 연령구조, 재정지출의 비중, 교사의 수준을 설명변수로 설정하여 Tobit모형을 이용하여 효율성의 영향요인을 분석하였다. 분석 결과에 의하면 1인당 GDP와 재정자립도는 효율성에 통계적 유의성이 나타나지 않으며, 연령구조, 재정지출의 비중 그리고 교사의 수준은 정(+)의 통계적 유의성이 나타나고 있다.

• KDI Journal of Economic Policy
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• 제44권3호
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• pp.49-74
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• 2022

This paper empirically examines how fiscal instability affects financial instability. According to an IMF forecast (2021a), the fiscal space in Korea will be steadily reduced in the future. The theoretical literature predicts that if fiscal stability is undermined, financial stability will also be in danger given that government guarantees on banks are weakened and/or sovereign bonds held in banks become riskier. This paper empirically finds the existence of this negative impact of fiscal instability on financial instability. I also find that the intensity of this fiscal-financial relationship is greater in a country where (i) its currency is not a reserve currency such as the US dollar or euro, (ii) its banking sector is large relative to government sector, and/or (iii) its private credit to GDP is high. Korea has all of these three characteristics and hence needs to put more effort into maintaining fiscal stability.

• Asian Journal of Business Environment
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• 제9권3호
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• pp.5-9
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• 2019

Purpose - This paper examines whether fiscal and monetary expansion would affect output in Australia. Research design, data, and methodology - An extended IS-LM model which describes the equilibrium in the goods market and the money market is applied. The real effective exchange rate and the real stock price are included in order to determine whether there may be any substitution or wealth effect. The sample consists of Annual data ranging from 1990 to 2018. The GARCH process is used in empirical work to correct for potential autoregressive conditional heteroscedasticity. Results - Expansionary fiscal policy reduces output; whereas, expansionary monetary policy raises output. In addition, real appreciation of the Australian dollar, a lower U.S. interest rate, a higher real stock price or a lower expected inflation would increase output. The finding that expansionary fiscal policy has a negative impact on real GDP suggests that the negative crowding-out effect on private spending dominates the positive impact. Conclusions - Fiscal prudence needs to be pursued. Real depreciation of the Australian dollar hurts output. Monetary tightening in the U.S. generates a negative effect on Australia's output. A healthy stock market is conducive to economic growth as higher stock prices tend to result in the wealth and other positive effects, increasing consumption and business spending.

• East Asian Economic Review
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• 제22권1호
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• pp.55-73
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• 2018

The substantial slowdown of economic growth since the global financial crisis of 2008-2009 is rekindling debate on whether developing Asia should use fiscal expansion to boost aggregate demand. A key factor in the debate is the effectiveness of countercyclical fiscal policy in the region. The global crisis, as well as the fiscal stimulus packages implemented by developing Asian countries at that time, give some clues to this important issue. The region weathered the global crisis well and experienced a robust V-shaped recovery. According to conventional wisdom, the fiscal stimulus packages put in place by Asian governments played a key role in the region's recovery. The central objective of this paper is to empirically test this wisdom by using cross-country panel data. Our main finding is that the stimulus has had a limited but positive impact on developing Asia's output during the global crisis. This lends some support to the notion that countercyclical fiscal policy can help the region cope with severe external shocks. The broader, more fundamental implication for regional policymakers is that the region's long-standing commitment to fiscal discipline can yield significant benefits beyond macroeconomic stability. An important consequence of this commitment - relatively healthy fiscal balance sheets - enabled the region's governments to quickly and decisively embark upon fiscal stimulus programs.

• 산경연구논집
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• 제9권1호
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• pp.25-38
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• 2018

Purpose - The purpose of this study is to empirically investigate the impact of donor's fiscal status on aid decisions before and after the 2008 global financial crisis. The effects on aid can change depending on the donor country's fiscal status and the period of financial crisis. Research design, data, and methodology - A fixed effect regression and dynamic panel GMM is conducted using a comprehensive dataset combining 31 donor and 167 recipient countries during 1996-2015. The key explanatory variable is central government debt-to-GDP ratio of donor country. Recipient countries' GNI per capita, population, governance indicators, and bilateral trade-to-GDP ratio between donor and recipient countries are included as control variables. Results - We can confirm the relationship between donor country's fiscal status and aid flow. The cyclical component of government debt is found to have a negative impact on grant decisions particularly after the 2008 global financial crisis. This effect becomes larger in the countries with high government debt-to-GDP ratio. ODA decisions from the countries with low financial constraint do not significantly affected by the recipient countries' factors such as GNI, population, and governance indicator. Conclusions - Based on the empirical results of this study, the source of aid should be diversified by incorporating private sector and innovative financing sources.

• 자원ㆍ환경경제연구
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• 제10권2호
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• pp.235-257
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• 2001

As in other Asian countries, the Korean government provides direct subsidies to endeavors that are potentially harmful to the environment. The water sector is one of the main recipients of these subsidies. The total amount of estimated direct fiscal subsidies equals 2.200 trillion won; however, the comprehensive cost of the subsidies is estimated to be much greater because environmental and social costs were not considered in the initial calculation. Most of the fiscal direct subsidies in the water sector are subsidized to urban water areas. The percentage of fiscal direct subsidies in the urban water sector to the total fiscal direct subsidies is 79.68%, while the percentage of fiscal direct subsidies in the industrial water sector is only 4.92%. Since the ratio of fiscal direct subsidies in the industrial water sector is quite small, the negative impact of removing fiscal direct subsidies for the industrial sector may be trivial. If the Korean government cuts dowm the VAT or income tax rate while reducing several types of subsidies, it will be able to achieve a double dividend effect both on the economy and the environment.

• KDI Journal of Economic Policy
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• 제23권1_2호
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• pp.71-147
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• 2001

The structural balance is obtained by neutralizing the impact of economic cycles on the actual balance. It is often used as an indicator of the long-term stability of government finance and as a measure of fiscal stance. Many countries nowadays produce and report the estimates of their structural balances regularly, and the IMF recently advised the Korean government to adopt this practice for better fiscal transparency. This paper surveys the methodologies employed by the OECD secretariat and the IMF to estimate structural balances and apply them to the Korean data. It then computes the fiscal impulse indicator (FI) and suggests a decomposition of FI into the changes in structural expenditures and revenues. In addition, primary and operational balances are estimated. The estimated series of structural balances, one by the OECD methodology and the other by the IMF, show no sizable difference from each other. These series also follow the actual series of budget balance quite closely. The latter characteristic stems from two factors, namely the rather small GDP gap and the rather small size of the tax revenue as a share of GDP. The impulse indicator estimated for the last three decades indicates that the fiscal stance in Korea contributed to smoothing the economic cycles in about half of the times. In particular, the fiscal tightening in the early 1980s to reduce inflation resulted in a pro-cyclical movement in fiscal stance as did the expansionary policy in the early 1990s. The overall performance, however, is not bad when compared with those of other countries.