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The Viability of Fiscal Policy in South Korea, Taiwan, and Thailand

  • Tsangyao Chang
  • WentRong Liu
  • Michael Thompson

The viability of stimulative fiscal policy has become a political issue in South Korea, Taiwan, and Thailand since the Asian financial crisis of 1997. This paper examines historical relationships between government spending, taxes, and output in these countries using cointegration and vector autoregression techniques with data starting in the 1950s. South Korea has had a policy of spend-and-tax, Taiwan tax-and-spend, while in Thailand there has been no apparent approach to fiscal policy. For the three countries, fiscal policy has had zero to negligible effects on output and is not recommended as a way to stimulate output.

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File URL: http://icepp.gsu.edu/sites/default/files/documents/icepp/wp/ispwp0209.pdf
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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper0209.

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Length: 23 pages
Date of creation: 01 May 2002
Date of revision:
Handle: RePEc:ays:ispwps:paper0209
Contact details of provider: Phone: 404-413-0235
Fax: 404-413-0244
Web page: http://aysps.gsu.edu/isp/index.html

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  17. Mundle, Sudipto, 1999. "Fiscal policy and growth: Some Asian lessons for Asia," Journal of Asian Economics, Elsevier, vol. 10(1), pages 15-36.
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