The Role of Macroeconomic Fundamentals in Malaysian Post Recession Growth
This study aims to find out the role of macroeconomic fundamentals in Malaysian post recession growth. The selected macroeconomic variables are exports, imports, price level, money supply, interest rate, exchange rate and government expenditure. The technique of cointegration was employed to assess the long run equilibrium relationships among the variables. Then, this study performs the Granger causality tests based on VECM to establish the short run causality among the variables. The long-run cointegrating relationship shown that an increase in exports, government expenditure or depreciation of exchange rate will promote long-term economic growth while increase in inflation, interest rate and imports will tamper the Malaysian economic growth. The results of short-run Granger-causality indicated that price level and government spending Granger-caused economic growth in the short-run. In conclusion, based on the results of long-run and short run analysis, the fiscal policy is probably the most appropriate tool in promoting economic growth in Malaysia during the post recession period.
|Date of creation:||2013|
|Publication status:||Published in chapter in book in Recession and Its Aftermath: Adjustments in the United States, Australia, and the Emerging Asia (2013): pp. 113-127|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- De Gregorio, Jose, 1993. "Inflation, taxation, and long-run growth," Journal of Monetary Economics, Elsevier, vol. 31(3), pages 271-298, June.
- Guerrero, Federico, 2006. "Does inflation cause poor long-term growth performance?," Japan and the World Economy, Elsevier, vol. 18(1), pages 72-89, January.
- Teame Ghirmay & Richard Grabowski & Subhash Sharma, 2001. "Exports, investment, efficiency and economic growth in LDC: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 33(6), pages 689-700.
- Sugata Ghosh & Andros Gregoriou, 2008. "The composition of government spending and growth: is current or capital spending better?," Oxford Economic Papers, Oxford University Press, vol. 60(3), pages 484-516, July.
- Wang, Yajie & Hui, Xiaofeng & Soofi, Abdol S., 2007. "Estimating renminbi (RMB) equilibrium exchange rate," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 417-429.
- Awokuse, Titus O., 2007. "Causality between exports, imports, and economic growth: Evidence from transition economies," Economics Letters, Elsevier, vol. 94(3), pages 389-395, March.
- Fölster, Stefan & Henrekson, Magnus, 2000.
"Growth Effects of Government Expenditure and Taxation in Rich Countries,"
SSE/EFI Working Paper Series in Economics and Finance
391, Stockholm School of Economics.
- Folster, Stefan & Henrekson, Magnus, 2001. "Growth effects of government expenditure and taxation in rich countries," European Economic Review, Elsevier, vol. 45(8), pages 1501-1520, August.
- Fölster, Stefan & Henrekson, Magnus, 1998. "Growth Effects of Government Expenditure and Taxation in Rich Countries," Working Paper Series 503, Research Institute of Industrial Economics, revised 20 Jun 2000.
- Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor, 2001.
"Does inflation matter for growth?,"
Japan and the World Economy,
Elsevier, vol. 13(4), pages 405-428, December.
- Liwan, Audrey & Lau, Evan, 2007.
"Managing Growth: The Role of Export, Inflation and Investment in three ASEAN Neighboring Countries,"
3952, University Library of Munich, Germany.
- Audrey Liwan & Evan Lau, 2007. "Managing Growth: The Role of Export, Inflation and Investment in Three ASEAN Neighboring Countries," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(4), pages 7-16, November.
- Khalid Yousif Khalafalla & Alan Webb, 2001. "Export-led growth and structural change: evidence from Malaysia," Applied Economics, Taylor & Francis Journals, vol. 33(13), pages 1703-1715.
- Gomme, P., 1993.
"Money and Growth Revisited : Measuring the Costs of Inflation in an Endogenous Growth Model,"
dp93-03, Department of Economics, Simon Fraser University.
- Gomme, Paul, 1993. "Money and growth revisited : Measuring the costs of inflation in an endogenous growth model," Journal of Monetary Economics, Elsevier, vol. 32(1), pages 51-77, August.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
- Samarjit Das, 2003. "Modelling money, price and output in India: a vector autoregressive and moving average (VARMA) approach," Applied Economics, Taylor & Francis Journals, vol. 35(10), pages 1219-1225.
- Kanta Marwah & Akbar Tavakoli, 2004. "The Effect of Foreign Capital and Imports on Economic Growth: Further Evidence from Four Asian Countries," Carleton Economic Papers 04-02, Carleton University, Department of Economics.
- Fernandez Valdovinos, Carlos G., 2003. "Inflation and economic growth in the long run," Economics Letters, Elsevier, vol. 80(2), pages 167-173, August.
- Hrushikesh Mallick & Shashi Agarwal, 2007. "Impact Of Real Interest Rates On Real Output Growth In India: A Long-Run Analysis In A Liberalized Financial Regime," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 52(02), pages 215-231.
- Arusha Cooray, 2009. "Government Expenditure, Governance and Economic Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 51(3), pages 401-418, September.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 141-163, September.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:44808. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.