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

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  • Tsangyao Chang
  • WentRong Liu
  • Michael Thompson

Abstract

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.

Suggested Citation

  • Tsangyao Chang & WentRong Liu & Michael Thompson, 2002. "The Viability of Fiscal Policy in South Korea, Taiwan, and Thailand," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0209, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper0209
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp0209.pdf
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    1. repec:kap:iaecre:v:12:y:2006:i:2:p:203-211 is not listed on IDEAS
    2. Yu Hsing, 2006. "Analysis of Output Fluctuations in Taiwan: An Application of the IS–MP–AS Model," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 12(2), pages 203-211, May.
    3. Torgler, Benno, 2004. "Tax morale in Asian countries," Journal of Asian Economics, Elsevier, vol. 15(2), pages 237-266, April.

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    Keywords

    fiscal policy; thailand; south korea;
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