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A note on the effects of government spending on economic growth in Korea

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  • Jinho Choi
  • Minkyu Son

Abstract

This study seeks to investigate how expansionary government spending shocks in Korea have influenced GDP growth since the 1980s through the lenses of time varying parameter structural vector autoregression (TVP-SVAR) approach. Our estimation results suggest that an increase in discretionary government spending has affected Korea’s economic growth in a favorable way while its stimulating effect has noticeably declined over the sample period. Furthermore, our cointegrating regression analysis suggests that government spending multiplier estimates in Korea have positive relationships with the public investment spending on infrastructure as well as the aggregate level of household debts, whereas modestly exhibiting inverse associations with trade openness and public debts.

Suggested Citation

  • Jinho Choi & Minkyu Son, 2016. "A note on the effects of government spending on economic growth in Korea," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 21(4), pages 651-663, October.
    • Handle: RePEc:taf:rjapxx:v:21:y:2016:i:4:p:651-663
    DOI: 10.1080/13547860.2016.1204746
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    References listed on IDEAS

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    4. Nicoletta Batini & Luc Eyraud & Lorenzo Forni & Anke Weber, 2014. "Fiscal Multipliers; Size, Determinants, and Use in Macroeconomic Projections," IMF Technical Notes and Manuals 14/04, International Monetary Fund.
    5. Mr. Ivan Tchakarov & Mr. Roland Straub, 2007. "Assessing the Impact of a Change in the Composition of Public Spending: A DSGE Approach," IMF Working Papers 2007/168, International Monetary Fund.
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    Cited by:

    1. Tovar Jalles, João & Park, Donghyun & Qureshi, Irfan, 2024. "Public and Private Investment as Catalysts for Growth: An analysis of emerging markets and developing economies with a focus on Asia," Journal of International Money and Finance, Elsevier, vol. 148(C).
    2. Jalles, João Tovar & Park , Donghyun & Qureshi, Irfan, 2024. "Public versus Private Investment Multipliers in Emerging Market and Developing Economies: Cross-Country Analysis with a Focus on Asia," ADB Economics Working Paper Series 737, Asian Development Bank.

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