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Effects of Fiscal, Monetary, and Exchange rate policies on Output in 12 Asian Economies, 1974-2007


  • Mohammed Nur HUSSAIN
  • Nam HOANG


Since the 1960s, the relative importance of monetary and fiscal policy in economic stabilization has been a matter of debate among monetarists and fiscalists. According to the monetarists’ view, monetary policy has had a more significant role than fiscal policy. On the other hand, the Keynesians School believes that fiscal policy is more powerful than monetary policy. So far, there have been a good number of empirical studies on the action of fiscal and monetary policy in developed and underdeveloped economies. Most of these studies emphasised different variables and different estimation procedures for analysing the effects of the two types of policy on output using a single equation. However, the findings have been equivocal. This study investigates panel data analysis to examine the effects of fiscal, monetary, Exchange rate policies on output in twelve selected Asian countries over the period 1974-2007. In order to test the relative strength of these two policies on output, the panel VAR technique utilized. The study reveals that the fiscal policy has a more powerful effect on output than the monetary policy in the case of these Asian economies.

Suggested Citation

  • Mohammed Nur HUSSAIN & Nam HOANG, 2014. "Effects of Fiscal, Monetary, and Exchange rate policies on Output in 12 Asian Economies, 1974-2007," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 14(2).
  • Handle: RePEc:eaa:aeinde:v:14:y:2014:i:2_14

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    References listed on IDEAS

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    More about this item


    Fiscal Policy; Monetary Policy; Panel Vector Autoregression.;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models


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