An Analysis of the Effects of Macro-Fiscal Policy in Korea

This study employs a dynamic analysis to assess the effectiveness of fiscal policy on the private sector within the Korean economy, utilizing long-term macroeconomic data. To achieve this, we conduct quantitative economic empirical analysis using the vector autoregressive model under the rolling window scheme. The major takeaways of this study confirm the necessity for strong fiscal policies in the Korean economy, given a new economic normal characterized by low growth, akin to advanced economies. Furthermore, it underscores the importance of implementing a balanced policy mix that combines both monetary and fiscal measures to guide the economy effectively towards stabilization.