This paper analyses the macroeconomic consequences of a fiscal policy implemented in South Korea during COVID-19, ‘Korean Economic Impact Payment (KEIP)’ program, that aims to stimulate offline consumption. In doing so, we modify a SIR-macro model by explicitly distinguishing online- and offline consumption goods. Benchmark analysis predicts that (1) there are positive effects on key macro variables at the impact while progress of the epidemic hardly changes and (2) the transfer multiplier from the KEIP is estimated to be about 0.5 at the impact, a value with what we expect from the usual neo-classical business cycle model.
Bibliographical noteFunding Information:
Shim acknowledges the financial support from Yonsei University (Yonsei University Future-leading Research Initiative of 2020 (2020-22-0088)). The authors thank the anonymous referees for helpful suggestions and comments. Shim acknowledges the financial support from Yonsei University (Yonsei University Future-leading Research Initiative of 2020 (2020-22-0088)). Hye Rim Yi provided excellent research assistance.
© 2021 Institute of East and West Studies, Yonsei University, Seoul.
All Science Journal Classification (ASJC) codes
- Business and International Management
- Economics, Econometrics and Finance(all)
- Political Science and International Relations