This paper studies macroeconomic effects of fi scal policies in four Asian
countries–Bangladesh, People’s Republic of China, Indonesia, and Philippines–by
means of structural macroeconometric model simulations. It is found that shortterm
fi scal multipliers from an untargeted increase in government expenditure
are positive but much less than those from an increased expenditure targeted
to capital spending. The multiplier effects from fi scal expansion via a tax rate
reduction are found to be typically much less than through higher spending.
The effectiveness of automatic stabilizers in general, and more specifi cally, the
effectiveness of expenditure versus tax-side stabilizers, differs across countries.