Fiscal Deficits in the Pacific Region (Routledge Studies in by Akira Kohsaka

By Akira Kohsaka

Financial coverage is an exceptionally very important device for governments internationally, with many nations dealing with dilemmas in crafting monetary rules to satisfy altering demographic wishes, larger calls for for social welfare and unexpected spending as a result of shocks akin to terrorism. this significant ebook seems to be at economic coverage within the Asian Pacific economies and with a huge array of participants should be a great tool to scholars, researchers and pros operating in foreign economics and finance.

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In fact, although tax revenue appears to have stagnated, nontax revenue such as Overview of fiscal policy issues 25 receipts from land sales (Hong Kong and Singapore) and investment income (Singapore) have compensated for conventional fiscal sources. As more sizable economies, Korea and Chinese Taipei have used fiscal policies not as counter-cyclical instruments but rather for development purposes. 4). While Korea is compelled to resort to fiscal expansion in order to counter the crisis-led slowdown and to pay for remedies, its debt ratio is still at manageable levels, at least for the time being.

Aside from its welfare costs/benefits, the impact of the reduction on the fiscal balance appears to have been decisively beneficial. Other important items for expenditure cuts included interest payments (Canada and New Zealand), which is the direct result of reduced debt, and military expenditure (the United States). In the 1990s, facing an unexpectedly prolonged recession that is viewed as being the worst in the past half-century, Japan has continued to try and boost its economy through expansionary fiscal measures.

This equivalently means that, with the zero primary balance in the long run, real GDP growth must be larger than or equal to the real interest rate at least for a stable debt-to-GDP ratio. 8 Source: World Bank (2001). Note na ϭ Not available. Japan provides a good numerical example for understanding the above basic relationship. 3 percent in the 1990s. Suppose the real interest rate is 3 percent in the long run. It is easy to see that Japan turned from a successful case in fiscal consolidation in the 1980s into a heavy debtor in the 1990s.

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