Comments by Maria Monica Wihardja, on Lessons from Thailand's Fiscal Policy

Maria Monica Wihardja: The paper discusses how fiscal policy can be used to stimulate growth during a slowdown, with some precautionary notes. The author argues that output expands when public expenditure increases or tax revenue collection decreases, suggesting an expansionary fiscal policy may affectively counteract a growth slowdown. Running a budget deficit is not as dangerous, especially when business confidence is high. However, an expansionary fiscal policy combined with higher growth and rising business confidence will result in inflation. The author cautions that an expansionary fiscal policy should be carried out during the period of oil price decline and exchange rate appreciation to mitigate the inflationary impact of the fiscal stimulus. The author also cautions that public spending should be focused on capital instead of current spending and that populist military spending will result in slow growths in Thailand.