Fiscal Deficits, Inflation and Economic Growth in a Successful Open Developing Economy
AbstractThis paper primarily seeks to establish whether long- and short-run relationships prevail between fiscal deficits on one hand and inflation and economic growth on the other in a developing economy such as Malaysia. The Malaysian economy has gained international acclaim as one of the successfully managed. Econometric methodology involving the Johansen cointegration and Granger causality techniques and annual data spanning generally from 1966 through 2003 have been mobilized for the purpose. The empirical results suggest that fiscal deficits could have an inflationary impact on the Malaysian economy as they are being monetized though no long run relationship exists amongst fiscal deficits, money supply and the price level. Fiscal deficits also appear to have neither long- nor short-run links with income.
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Bibliographic InfoArticle provided by Review of Applied Economics in its journal Review of Applied Economics.
Volume (Year): 2 (2006)
Issue (Month): 1 ()
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deficits; growth; inflation; International Development; E60; H30; H61; H62;
Find related papers by JEL classification:
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
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