The Impact of Financial and Fiscal Variables on Economic Growth: The Case of India and Korea
This paper applies a simple macroeconomic model developed by Green and Murinde (1993) to Korea and India and studies the potency of fiscal and financial policies. The fiscal variables are real government spending, the income tax rate, and the export tax rate; while financial policy variables are the official interest rate, loans from commercial banks, foreign reserves or the exchange rate and foreign capital inflows. Dummies for political instability and financial reforms specific to the two countries are also included. We find that while government expenditure, income taxes and foreign capital inflow have the same effects in the two countries, interest rates, money supply, foreign reserves and financial liberalization have different effects, bringing out the differences in the two economies, [E63, 011, 053]
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Volume (Year): 14 (2000)
Issue (Month): 2 ()
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References listed on IDEAS
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- Sweder van Wijnbergen, 1986.
"Exchange Rate Management and Stabilization Policies in Developing Countries,"
in: Economic Adjustment and Exchange Rates in Developing Countries, pages 17-42
National Bureau of Economic Research, Inc.
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- Mosley, Paul, 1980. "Aid, Savings and Growth Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 42(2), pages 79-95, May.
- Green, Christopher J & Murinde, Victor, 1998. "Modelling the Macroeconomic Policy Framework for an Emerging Market Economy," The Manchester School of Economic & Social Studies, University of Manchester, vol. 66(3), pages 302-30, June.
- Van Wijnbergen, S., 1983. "Interest rate management in LDC's," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 433-452, September.
- Green, Christopher & Murinde, Victor, 1993. "The potency of stabilization policy in developing economies: Kenya, Tanzania, and Uganda," Journal of Policy Modeling, Elsevier, vol. 15(4), pages 427-462, August.
- Godfrey, Leslie G, 1978. "Testing against General Autoregressive and Moving Average Error Models When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1293-1301, November.
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