Fiscal Policies of Korea through the Global Financial Crisis

초록

This paper examines the expansionary fiscal policies taken in Korea during the recent Global Financial Crisis (GFC) and evaluates their effectiveness in the recovery process. In light of the historical trend of fiscal consolidation, the fiscal stimulus package during the GFC is unprecedented both in terms of timing and magnitude. The existing literature has split decisions on the efficacy of fiscal policies in Korea. In contrast, this paper, adopting three different empirical strategies, reports evidences, though limited, that the massive fiscal expansion during the GFC sustained the Korean economy after the currency depreciation has lost its influence on trade balance.

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