The impact of government budget on national financial security: a case study in Vietnam

ABSTRACT

This paper aims to examine the effect of the budget balance on national financial security in the linkage of macroeconomic variables by using the VAR model approach from 1995 to 2020 in Vietnam. Moreover, the methods of Impulse Response Function (IRF) and variance decomposition (FEDV) analysis show the impact of budget balance on the financial security situation in the short run. The results indicate that budget balance has a positive effect in the short term and explains about 2.04% of Vietnam’s financial security index. Several policy implications are suggested to enhance the financial stability in Vietnam during the Covid-19 pandemic.

KEYWORDS:

• Budget balance
• financial security
• VAR model
• Covid-19 pandemic
• Vietnam

JEL classification:

• B23
• E62
• G28
• O23

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.