A modest attempt has been made to analyze the efficacy of
fiscal policy in Korea by investigating the degree of crowing out
or crowding in within the context of a household optimization
model and through the estimation of household consumption and
saving function with the data set over the period 1963-86.

Fiscal policy in Korea has been a powerfully effective
instrument for economic stabilization, to the extent that
government spending in Korea, whether debt-or tax-financed,
has crowded in rather than crowed out household consumption.
This result contrasts with the notion of fiscal
policy-ineffectiveness posited by the ultrarationality and prefect
foreknowledge hypotheses. Furthermore, government and
corporate saving turn out to be complements to rather than
substitutes for household saving, which indicates that
government and corporate saving can be effective policy
variables for national capital formation.

Ⅰ. Introduction
Ⅱ. The Issues Involved
Ⅲ. The Model and Hypotheses
Ⅳ. Previous Empirical Studies
Ⅴ. Estimation Results
Ⅵ. Conclusions