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The Role for Counter-Cyclical Fiscal Policy in Singapore

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  • Leif Lybecker Eskesen
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    Abstract

    Singapore''s policymakers have often used fiscal policy as a counter-cyclical tool. Empirical results based on a structural autoregression framework suggest that fiscal policy can be used for demand management, although the impact may be somewhat short lived. The short-lived impact could reflect a number of factors, including the absence of credit-constrained economic agents, a high propensity to save among households, monetary focus on price stability, and leakages due to economic openness. Notwithstanding, fiscal policy should still play a key stabilizing role in the current downturn given the downside risks to growth and the vast fiscal space.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/8.

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    Length: 18
    Date of creation: 01 Jan 2009
    Date of revision:
    Handle: RePEc:imf:imfwpa:09/8

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    Related research

    Keywords: External shocks; Price stabilization; Economic models; fiscal policy; expenditure; fiscal multipliers; fiscal stimulus; fiscal shocks; fiscal measures; government expenditure; tax rebates; structural fiscal; fiscal variables; expenditures; tax credits; fiscal variable; discretionary fiscal policy; fiscal space; aggregate demand; fiscal decisions; tax incentives; cyclical fiscal policy; fiscal sustainability; government spending; fiscal expansion; fiscal contractions; expenditure data; fiscal design; taxation; tax credit; public debt; government revenue; fiscal developments; fiscal stimulus package; budget deficits; tax bases; fiscal response; fiscal decision; fiscal implementation; public sector solvency; structural expenditure;

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    1. Francesco Giavazzi & Marco Pagano, 1990. "Can Severe Fiscal Contractions Be Expansionary? Tales of two Small Euopean Countries," Working Papers 89, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Olivier Blanchard & Roberto Perotti, 1999. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," NBER Working Papers 7269, National Bureau of Economic Research, Inc.
    3. Alan S. Blinder, 2004. "The Case Against the Case Against Discretionary Fiscal Policy," Working Papers 102, Princeton University, Department of Economics, Center for Economic Policy Studies..
    4. Adam S. Posen, 1998. "Restoring Japan's Economic Growth," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 35.
    5. Roberto Perotti, 2005. "Estimating the effects of fiscal policy in OECD countries," Proceedings, Federal Reserve Bank of San Francisco.
    6. Giancarlo Corsetti & Nouriel Roubini, 1996. "Budget deficits, public sector solvency and political biases in fiscal policy : a case study of Finland," Finnish Economic Papers, Finnish Economic Association, vol. 9(1), pages 18-36, Spring.
    7. Kuttner, Kenneth N. & Posen, Adam S., 2002. "Fiscal Policy Effectiveness in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 16(4), pages 536-558, December.
    8. de Castro Fernández, Francisco & Hernández de Cos, Pablo, 2006. "The economic effects of exogenous fiscal shocks in Spain: a SVAR approach," Working Paper Series 0647, European Central Bank.
    9. Wolff, Guntram B. & Tenhofen, Jörn & Heppke-Falk, Kirsten H., 2006. "The macroeconomic effects of exogenous fiscal policy shocks in Germany: a disaggregated SVAR analysis," Discussion Paper Series 1: Economic Studies 2006,41, Deutsche Bundesbank, Research Centre.
    10. King, R.G. & Baxter, M., 1990. "Fiscal Policy In General Equilibrium," RCER Working Papers 244, University of Rochester - Center for Economic Research (RCER).
    11. Perotti, Roberto, 2005. "Estimating the Effects of Fiscal Policy in OECD Countries," CEPR Discussion Papers 4842, C.E.P.R. Discussion Papers.
    12. Giordano, Raffaela & Momigliano, Sandro & Neri, Stefano & Perotti, Roberto, 2007. "The effects of fiscal policy in Italy: Evidence from a VAR model," European Journal of Political Economy, Elsevier, vol. 23(3), pages 707-733, September.
    13. Dennis P. J. Botman & David Rose & Douglas Laxton & Philippe D Karam, 2007. "DSGE Modeling At the Fund," IMF Working Papers 07/200, International Monetary Fund.
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    Cited by:
    1. Jha, Shikha & Mallick, Sushanta K. & Park, Donghyun & Quising, Pilipinas F., 2014. "Effectiveness of countercyclical fiscal policy: Evidence from developing Asia," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 82-98.

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