Jurnal Ekonomi Malaysia
52 (1) 2018 67 – 76
Centre for Business, Economics and Finance Forecasting
Universiti Malaysia Sarawak
94300 Kota Samarahan, Sarawak
MALAYSIA
Department of Economics, Faculty of Economics and Business
Universiti Malaysia Sarawak
94300 Kota Samarahan, Sarawak
MALAYSIA
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
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.
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Bibliography
@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},
}
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