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Jurnal Ekonomi Malaysia

52 (1) 2018 67 – 76

Estimating Fiscal Reaction Functions in Malaysia, Thailand and the Philippines
Anggaran Fungsi Reaksi Fiskal di Malaysia, Thailand dan Filipina

Centre for Business, Economics and Finance Forecasting
Universiti Malaysia Sarawak
94300 Kota Samarahan, Sarawak
MALAYSIA

lphevan@unimas.my

Department of Economics, Faculty of Economics and Business
Universiti Malaysia Sarawak
94300 Kota Samarahan, Sarawak
MALAYSIA

alvina1101@hotmail.com

Abstract

As with most of the world economy, the 2008/09 global financial crisis has brought massive impacts on Southeast Asian economies. The debt/GDP ratios in most economies rose significantly, thus putting the spotlight again on fiscal sustainability. This article aims to distinguish the reaction of the primary balance/GDP to changes in the debt/GDP to assess the fiscal sustainability of Malaysia, Thailand, and the Philippines. In investigating how the respective governments react to the accumulation of debt, the article estimates the fiscal reaction function, initiated by Bohn (1998), using Ordinary Least Square (OLS) and Vector Autoregression (VAR). The empirical analysis reveals that, based on past behaviour, fiscal policy in Malaysia, Thailand, and the Philippines remains sustainable.

Keywords

Fiscal reaction functions; fiscal sustainability; Malaysia; Philippines; Thailand

Author’s Acknowledgement

The authors would like to thank the two anonymous referees and the editor for their helpful comments and suggestions on an earlier draft. The authors gratefully acknowledges financial support from the Ministry of Higher Education (MOHE) Malaysia [RACE/e(2)/1101/2014(09)]. As usual, the responsibility of errors and omissions rests with the authors.

http://dx.doi.org/10.17576/JEM-2018-5201-6
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Bibliography

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Lau, , & Lee, (2018). Estimating Fiscal Reaction Functions in Malaysia, Thailand and the Philippines. Jurnal Ekonomi Malaysia, 52(1), 67–76. http://dx.doi.org/10.17576/JEM-2018-5201-6

@article{lau2018estimating,
  title={Estimating Fiscal Reaction Functions in Malaysia, Thailand and the Philippines},
  author={Lau, Evan and Lee, Alvina Syn-Yee},
  journal={Jurnal Ekonomi Malaysia},
  volume={52},
  number={1},
  pages={67—76},
 

year={2018},
}

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