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Assessment of Budget Sustainability in Sarawak

Author

Listed:
  • Chin-Hong Puah

    (Faculty of Economics and Business, Universiti Malaysia Sarawak)

  • Evan Lau

    (Faculty of Economics and Business, Universiti Malaysia Sarawak)

  • Hui-Fern Teo

    (Faculty of Economics and Business, Universiti Malaysia Sarawak)

Abstract

This study reexamines the sustainability of budget stance of Sarawak state, 1970-2008. Using the intertemporal borrowing constraint as a framework, the study tests the long-run relationship between government revenue and expenditure. Empirical results demonstrate a long-run equilibrium relationship among the variables. The cointegration test result suggests that Sarawak state’s fiscal stance satisfies the weak sustainability condition. In addition, the Granger causality test result reveals a bi-directional relationship between government revenue and expenditure. This means that fiscal authorities made simultaneous decisions on expenditure and revenue. Government revenue and expenditure will mutually reinforce each other.

Suggested Citation

  • Chin-Hong Puah & Evan Lau & Hui-Fern Teo, 2012. "Assessment of Budget Sustainability in Sarawak," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(8), pages 952-965, December.
  • Handle: RePEc:asi:aeafrj:2012:p:952-965
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    References listed on IDEAS

    as
    1. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    2. Soyoung Kim & Doo Yong Yang, 2009. "Do Capital Inflows Matter to Asset Prices? The Case of Korea ," Asian Economic Journal, East Asian Economic Association, vol. 23(3), pages 323-348, September.
    3. repec:asi:aeafrj:2012:p:530-543 is not listed on IDEAS
    4. Unggul Heriqbaldi, 2012. "Exchange Market Pressure in Indonesia: A Univariate Markov Switching Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(5), pages 603-616, September.
    5. Guillermo A. Calvo & Carmen M. Reinhart, 2000. "Fixing for Your Life," NBER Working Papers 8006, National Bureau of Economic Research, Inc.
    6. Ghirmai T. Kefela, 2011. "Driving Forces of Globalization in Emerging Market Economies Developing Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(2), pages 83-94, June.
    Full references (including those not matched with items on IDEAS)

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