The Bank of Korea said on Monday that fiscal spending may help boost the country's gross domestic product(GDP).

The central bank said in a report that every one trillion won spent by the government will generate one-point-27 trillion won in GDP over a five-year period. 

The BOK said that the multiplier effect of government spending on the local economy is thus one-point-27 over a five-year period.

The figure is higher than estimates given by major domestic think tanks, which put the number at around point-five. This means ten trillion won spent by the government would generate just five trillion won in GDP.  

The BOK, however, said that these estimates did not take into account the possible effects of government spending on boosting corporate investment and private consumption.

Park Gwang-yong, a researcher at the BOK's Economic Research Institute, told reporters that an increase in government spending can boost GDP and that the government's fiscal policy can be used to stabilize the economy.