Input 2021.01.06 06:00 | Revision 2021.01.06 09:00
KDI “National subsidy consumption effect is 30%“…Does it represent the Ministry of Finance, which is concerned about financial soundness?
The Korea Institute for Taxation and Finance (Cho Se-yeon) criticized Gyeonggi Province’s theory of the utility of local currency again. As a result, the second debate between Gyeonggi Governor Lee Jae-myung and Gyeonggi Governor Cho Se-yeon, who is promoting local currency as a policy trademark, is starting to appear.
In the report “The Impact of Local Currency Introduction on Local Economy” released on the 4th, Cho Se-yeon directly criticized Gyeonggi-yeon’s “Analysis on the Impact of Local Money on Gyeonggi Small Business Sales: Comprehensive 1-4 Quarters of 2019” through a prior research review. . The Gyeonggi-yeon report, published in September of last year, contains the conclusion that “when local currency payments increase, sales of small businesses increase by 57%.”
Prior to this, the Korea Development Institute (KDI) also published a report stating that the economic effect of the national disaster subsidy amounting to 1,420 trillion won is only 4 trillion won. It was said that the effect of the national disaster subsidies did not meet political expectations, which made the passport that promoted it embarrassing.
With Lee Nak-yeon and the Democratic Party leader insisting on the second national disaster subsidy payment, it is also interpreted that the will of the Ministry of Strategy and Finance is quite melted in the background of criticizing the local currency that passport politicians demand. It is a view that reflects the will not to let the fiscal soundness worsen with the national disaster subsidies.
Cho Se-yeon’s report criticizes the grounds for the utility of local currency in the Gyeonggi-yeon report. First of all, the Gyeonggi-yeon report showed that sales of small business owners who had customers who paid in local currency after the introduction of local currency increased by 2,600,000 won, and when local currency payments increased, the sales of small business owners also increased by 45%, and the amount of local currency settlement through comparison within the same store. It was concluded that the sales of small business owners increased by 57% when
However, the Jo Se-yeon report pointed out that the effect of increasing sales suggested by Gyeonggi-yeon is “the effect of local currency paid for free and the effect of local currency purchased at a certain discounted amount by consumers are added together, so it is necessary to distinguish this.” . In order to analyze the effects of local currency, it is necessary to analyze the local currency that is purchased and used at a certain discount instead of cash.The Gyeonggi-yeon research conducted a youth dividend of KRW 176.0 billion paid in local currency in 2019, and KRW 2183 billion in maternal health support projects. It is said that the effect of the subsidy was mixed and reflected in the estimation of the effect of local currency.
Jo Se-yeon also pointed out that Gyeonggi-yeon’s report was not controlled by seasonal and regional factors in the analysis process, so it was impossible to distinguish whether the change in retail sales was due to local currency or seasonal or regional factors.
Governor Lee and Jo Se-yeon’s bad story goes back to September last year. At the time, Seyeon Jo released a summary of the report that was released this time. From the perspective of local governments, it seems that sales of self-employed people in the region will increase by preventing consumption from leaking to other regions, but it is said that consumption expenditures are the same across the country and additional budgets for issuing, distributing, and managing local currency are required.
Governor Lee said, “It is a stupid state-run research institute that beats government policies without grounds,” and said, “We have to seriously reprimand government research institutes that undermined government policies.” Director Kim Yoo-chan, Jo Se-yeon, said, “There is no plan to withdraw the contents of the research report.” Governor Lee exclaimed, “From the beginning of the research report, local currency is specified as’inferior’ at all, and Seyeon Jo is increasingly weird.” In addition, it was also said that Jo Se-yeon was “the right to be liquidated.”
However, as the debate between Governor Lee and Se-yeon Cho continued, the National Assembly Budget Office and the Korean Finance Association, who received the service of the Presidential Policy Planning Committee, also pointed out the limitations of local monetary policy one after another. In particular, the National Assembly Budget Office has criticized the local monetary policy with arguments similar to those of the Joseon Cho’s report in each analysis report on this year’s original budget and the first and third additional budget bills. The’Effects of Local Currency on Local Employment’, prepared by the Korean Finance Association and published in March last year by the Presidential Committee on Policy Planning, also pointed out that the introduction or expansion of local currency does not have a significant effect on the size of local employment. .
This is not the first time that a national researcher like Jo Se-yeon has criticized populism in the political world.
In the report’Effects and Implications of the First Emergency Disaster Subsidy Policy’, which was previously released by the Korea Development Institute (KDI) on the 23rd of last month, credit card and debit card sales increased due to the emergency disaster subsidy of 1.42 trillion won to about 4 trillion won. Said it was only. This means that the effect of boosting consumption was only 30%. Instead, KDI suggested that a system that directly supports by identifying the victims is needed. It is said that there is a limit to the expansion of sales of businesses with large damages, such as the travel industry and the face-to-face service, only by preserving household income through the payment of disaster subsidies in the situation of the corona spread.
KDI Research Fellow Oh Yun-hae said, “In preparation for the need to repay disaster subsidies due to the re-proliferation of the corona, a system that can quickly and accurately identify and support the affected class by collecting and analyzing data on the scale of damage by economic entity in advance. I have to build it.”
It seems that the consensus of researchers and the Ministry of Strategy and Finance said that it is time to check the political power to expand finances recklessly due to the shock of the novel coronavirus infection (Corona 19).
The Ministry of Science and Technology reluctantly agreed after sticking to the ruling party’s opposition to the payment plan for all citizens until just before the decision to pay the first disaster support fund to the public last year. Deputy Prime Minister Hong Nam-ki and Minister of Strategy and Finance said at the National Assembly on April 28 last year that “(the national disaster support payment) is one-time”. “If we need to discuss the amount of support again, we will adjust (according to the required level) rather than 100% (target payment). “We will do it again and again (and 100% payment loans) to make a different opinion.”
However, as the ruling party is fiddling with the second “National Disaster Subsidy” card on the occasion of the upcoming April re-election, it is unclear how much the National Research Institute’s “resistance” will work.
On the 4th, Lee Nak-yeon, head of the Democratic Party, and Prime Minister Jeong Sye-gyun, respectively, mentioned the possibility of distributing disaster assistance to the people through a broadcast interview. In an interview with KBS, CEO Lee said, “When the corona is subdued and the game needs to be accelerated, we can also review the national support plan,” and Prime Minister Chung appeared on MBC and said, “There is a pain that the nation suffers. There is a lot of damage.” Apart from selective support for people, the game should be promoted.”
Governor Lee Jae-myeong also posted a post on Facebook on the same night entitled, “This is a letter to the National Assembly members and the Minister of Equipment,” “A disaster that is universally paid to the people in local currency that has proven economic effect through the first disaster support payment. Please execute the subsidy.” Governor Lee mentioned the press release of Gyeonggi Province on December 23 last year, which claimed the effect of driving consumption of local currency in Gyeonggi Province. As a result of analyzing the statistics of card companies in April-August 2020, it was mentioned that additional consumption expenditure of 2,625.4 billion won was caused by the amount paid to Gyeonggi-do as the central government emergency disaster support fund and Gyeonggi-do disaster basic income.
In this regard, there are voices in the economics community that the disaster subsidies for the whole country are too early in the quarantine situation against Corona 19. Professor Ha Jun-kyung of Hanyang University said, “It is more appropriate time to focus on the areas where the damage is severe.” Professor Ha said, “Selection support is necessary to increase acceptance of quarantine measures in the situation of 2.5 steps of social distancing, and there are justifications such as compensation for the affected sectors, but the support for the whole country promotes consumption and macroeconomic circulation. “It means to support the economy.” It is said that only after the vaccine is supplied and the quarantine problem is resolved, it is possible to think about macroeconomic stimulus measures.