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Fiscal policy in Korea: Before and after the financial crisis

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  • Young Lee
  • Changyong Rhee
  • Taeyoon Sung

Abstract

This paper examines the role of fiscal policy in the Korean financial crisis and the subsequent recovery from it. We specifically address three questions: Was Korea’s fiscal policy prior to the crisis conservative, or were there large hidden contingent liabilities not captured in the official budget balance? What were the main characteristics of fiscal policy in stimulating and restructuring the economy under the IMF stabilization program in Korea? How effective were the financial guarantee and public investment programs as part of the counter-cyclical fiscal policy in the recovery process from the crisis? To address these questions, we re-estimate the consolidated budget deficits in Korea by incorporating the quasi-fiscal activities of public funds and public enterprises using their micro balance-sheet data from 1972 to 2003. Copyright Springer Science + Business Media, LLC 2006

Suggested Citation

  • Young Lee & Changyong Rhee & Taeyoon Sung, 2006. "Fiscal policy in Korea: Before and after the financial crisis," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(4), pages 509-531, August.
    • Handle: RePEc:kap:itaxpf:v:13:y:2006:i:4:p:509-531
    DOI: 10.1007/s10797-006-8598-3
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    Cited by:

    1. Ju, Yong Han & Sohn, So Young, 2014. "Updating a credit-scoring model based on new attributes without realization of actual data," European Journal of Operational Research, Elsevier, vol. 234(1), pages 119-126.
    2. Weonho Yang & Jan Fidrmuc & Sugata Ghosh, 2012. "Macroeconomic Effects of Government Spending Shocks: New Evidence Using Natural Disaster Relief in Korea," CESifo Working Paper Series 3943, CESifo.
    3. Leon du Toit, 2009. "Economic Crises, Stabilisation Policy and Output in Emerging Market Economies," Working Papers 20/2009, Stellenbosch University, Department of Economics.
    4. Hong, Kiseok, 2010. "Fiscal Policy Issues in Korea after the Current Crisis," ADBI Working Papers 225, Asian Development Bank Institute.
    5. Kiseok Hong, 2010. "Fiscal Policy Issues in Korea after the Current Crisis," Macroeconomics Working Papers 22754, East Asian Bureau of Economic Research.
    6. Park, Danbee & Sung, Taeyoon, 2020. "Foreign debt, global liquidity, and fiscal sustainability," Japan and the World Economy, Elsevier, vol. 54(C).

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