Experts offer their take on various fiscal tools

A view of the Singapore skyline.
A view of the Singapore skyline.PHOTO: ST FILE

Conventional theory says that to boost demand and create jobs, governments may carry out infrastructure projects or lower taxes to boost spending and economic activity.

But in a small and open economy like Singapore, the high savings rate and leakage through import payments make the "fiscal multiplier" too small to pursue such expansionary policies, says Lee Kuan Yew School of Public Policy professor Ramkishen Rajan.

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A version of this article appeared in the print edition of The Straits Times on February 15, 2020, with the headline 'Experts offer their take on various fiscal tools'. Subscribe