How did Korea’s fiscal accounts fare during the COVID-19 pandemic?
Summary
Policy Brief 23-8 from June 2023 by Joseph E. Gagnon (PIIE) and Asher Rose (PIIE), part of a 2023 series on the Korean economy, on how the fiscal accounts of South Korea fared during the COVID-19 pandemic. The brief says Korea did as much as the typical advanced economy in increasing overall pandemic spending, yet its fiscal deficit was lower than those of other advanced economies for reasons unrelated to the size of its fiscal response. The authors find that fiscal revenues rose more strongly than in most other advanced economies, reflecting strong revenues from asset-based taxes as asset prices rose, and that GDP rose more strongly in 2020-21. The page offers a data download (pb23-8.zip, 66.69 MB) and a list of recommended related items.
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“How did Korea’s fiscal accounts fare during the COVID-19 pandemic?”
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Publication Type Policy Briefs How did Korea’s fiscal accounts fare during the COVID-19 pandemic? Joseph E. Gagnon (PIIE) and Asher Rose (PIIE) Policy Brief 23-8 June 2023 This research is part of a 2023 series on the Korean economy. For additional research, look under "Recommended." Body South Korea undertook a number of important fiscal steps in 2020-21 to fight the COVID-19 pandemic. Key policies it adopted were common to most advanced economies, including transfers to support households, firms, and workers and increased resources for public health measures such as testing, tracing, quarantines, and vaccine rollouts. In terms of the increase in overall pandemic spending, Korea did as much as the typical advanced economy. Yet its fiscal deficit was lower than those of other advanced economies for reasons unrelated to the magnitude of its fiscal response. The authors find that Korea’s fiscal revenues rose more strongly than in most other advanced economies despite few discretionary changes to tax rates, reflecting strong revenues from asset-based taxes in an environment of rising asset prices. This serendipitous surge in revenues offset much of Korea’s pandemic-related increases in expenditures, keeping its fiscal deficit low. Korea’s GDP rose more strongly in 2020-21 than GDP in most other advanced economies, reflecting strong foreign demand for Korean exports and a better public health response, which minimized COVID mortality and necessitated fewer restrictions on mobility. Download Data Disclosure: The data underlying this analysis can be downloaded here [zip]. Related Documents - Document pb23-8.zip (66.69 MB) Recommended Policy Briefs How US chip controls on China benefit and cost Korean firms July 2023 Policy Briefs Korea faces opportunities as well as risks under the Indo-Pacific Economic Framework July 2023 Policy Briefs Korea has increased its lending to emerging-market and developing economies but faces risks if their debt problems grow July 2023 Working Papers How the United States solved South Korea’s problems with electric vehicle subsidies under the Inflation Reduction Act July 2023 More From Headshot Full Name Joseph E. Gagnon Senior Research Staff Headshot Full Name Asher Rose Former Research Staff More on This Topic Working Papers Lessons from China's fiscal policy during the COVID-19 pandemic Tianlei Huang (PIIE) March 2024 PIIE Briefings The worst inflation outbreak in 40 years: Distilling lessons from the COVID era Karen Dynan (PIIE) and David Wilcox (PIIE), editors February 2026 Policy Briefs The COVID era inflation surge: Causes, consequences, and policy lessons Karen Dynan (PIIE) and David Wilcox (PIIE) January 2026 Related Topics Want more research like this? Subscribe to the PIIE Insider Weekly Newsletter
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