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Changing impact of fiscal policy on selected ASEAN countries

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Author Info

  • Tang, Hsiao Chink
  • Liu, Philip
  • Cheung, Eddie C.

Abstract

This paper investigates the effectiveness of fiscal policy in five Association of Southeast Asian Nations: Indonesia, Malaysia, the Philippines, Singapore and Thailand. Through a small open economy structural vector autoregression model, government spending is found to have weak and largely insignificant impact on output, while taxes are found to have outcomes contrary to conventional theory. Extensions using a time-varying VAR model reveal that the positive impact from higher taxes on output mainly reflects heightened concerns over public finances during the Asian financial crisis and the recent global financial crisis. On the other hand, for Thailand, there is some evidence that government spending can at times be useful as a tool for short-term countercyclical policy.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 24 (2013)
Issue (Month): C ()
Pages: 103-116

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Handle: RePEc:eee:asieco:v:24:y:2013:i:c:p:103-116

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Web page: http://www.elsevier.com/locate/asieco

Related research

Keywords: ASEAN; Fiscal policy; Structural VAR; Time-varying VAR;

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References

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  10. Carmen M. Reinhart, 2010. "This Time is Different Chartbook: Country Histories on Debt, Default, and Financial Crises," NBER Working Papers 15815, National Bureau of Economic Research, Inc.
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  12. Valerie A. Ramey, 2011. "Identifying Government Spending Shocks: It's all in the Timing," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 1-50.
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Cited by:
  1. Yingxin Shi & Mototsugu Fukushige, 2013. "Long-Run Fiscal Multiplier for Autonomous Prefectures in China," Discussion Papers in Economics and Business 13-10, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  2. Sudip Ranjan Basu & Clovis Freire & Pisit Puapan & Vatcharin Sirimaneetham & Yusuke Tateno, . "Euro zone debt crisis: Scenario analysis and implications for developing Asia-Pacific," MPDD Working Paper Series WP/12/03, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  3. Oscar Parkyn & Tugrul Vehbi, 2013. "The Effects of Fiscal Policy in New Zealand: Evidence from a VAR Model with Debt Constraints," CAMA Working Papers 2013-04, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  4. Pongsudhirak, Thitinan, 2013. "Between Economic and Political Crises:Thailand’s Contested Free Trade Agreements," Working Papers 63, JICA Research Institute.

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