The Korean Economic Forum
Fiscal Policy in Post Covid 19 Periods
Jong-Suk Han (Ajou University)Year 2021Vol. 14No. 3
This paper suggests the mid-term fiscal plan to recover fiscal sustainability after the massive government expenditure reacting to the Covid-19. We conduct the debt sustainability analysis to examine the main driving forces for the government debt increase. As expected, the primary deficit mostly drives the debt increase; meanwhile, the low interest rate environment does not provide alarge fiscal space in Korea. Using the debt dynamics, we project the debt trajectory from 2026 to 2030. Our analysis suggests that the overall balance deficit should be set around 2% to carry out the recently proposed fiscal rule.