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Fiscal policy and national saving in emerging Asia: challenge or opportunity?

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  • Duy-Tung Bui

    (University of Economics Ho Chi Minh City
    University of Bourgogne Franche-Comté)

Abstract

Emerging Asian economies have been acknowledged with a relatively high saving rate for several decades compared to other parts of the world. Higher saving presents an opportunity for this region since it is considered a source of sustainable economic growth. However, average national saving rate in emerging Asia is on the verge of decline. If this is true, then governments in the region could face great challenges in pursuing their sustainable growth path. This paper investigates whether governments can use their traditional tool of fiscal policy to influence national saving, and counteract the declining trend. Using a panel data set of 16 emerging Asian markets from 1990 to 2016, the empirical findings point out several problems in the region. Fiscal authorities do not seem to be concerned about stabilizing the national saving rate. However, the national saving rate behaves in a Keynesian manner to fiscal policy. There is a lack of evidence that the region has effectively used the savings as a force of economic growth. Policy implications are also discussed.

Suggested Citation

  • Duy-Tung Bui, 2018. "Fiscal policy and national saving in emerging Asia: challenge or opportunity?," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 305-322, August.
  • Handle: RePEc:spr:eurase:v:8:y:2018:i:2:d:10.1007_s40822-018-0092-6
    DOI: 10.1007/s40822-018-0092-6
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    1. Kazuki Hiraga, 2019. "Unit versus ad valorem tax comparisons in a simple New Keynesian dynamic stochastic general equilibrium model," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(4), pages 459-466, December.

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    More about this item

    Keywords

    Fiscal policy; National saving; PVAR;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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