A Theoretical Analysis and System Design Study for Korean Pay-as-you-go (PAYGO) Institutions

Lee， Jeonghee

Nowadays in Korea, students of public budgeting and finance are paying attention to the fiscal rules in advanced countries since there is an urgent need to curb the rapidly increasing level of mandatory spending. These circumstances have given rise to debates about the introduction of fiscal rules in general and a pay-as-you-go (PAYGO) rule in particular. This article presents an institutional analysis of the PAYGO rule in the US federal government and congress. Applying a theoretical framework from the legislative studies literature, the process and structure of the PAYGO rule for mandatory and direct spending are analyzed and used as the theoretical foundation to advocate the introduction of a PAYGO rule in Korea. The analysis identifies both merits and demerits of PAYGO rules and highlights the partial truths in the strong criticism of the PAYGO rule. On the basis of the analysis, several rationales to support the institutionalization of a PAYGO rule in Korea are presented. Thus, this article attempts to integrate the logic from both sides of the debate and to develop an upgraded version of the PAYGO rule which is more suited to Korean budget processes and structures. A two-stage legislative decision making process for the mandatory spending and entitlements program is proposed along with restructuring of the legislative structure into a top-down budgeting system. It is intended that the theoretical basis developed in this study for a PAYGO rule in Korea can be used in future studies to aid design of a reform proposal for budgeting and legislative processes and structures in the National Assembly.

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* 2021년 이후 발행 논문의 참고문헌은 현재 구축 중입니다.

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