Government Intervention in the Economy-Test on Malaysia's Fiscal Conduct
Using Malaysia as a case study, this paper investigates the conduct of fiscal policy regimes during the last three decades. Empirical results show that in pre-crisis Malaysia the fiscal stance is not sustainable, while in the full sampling period (including the post-1997 crisis era) it satisfies...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Asia Pacific Journal of Economics and Business
2006
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| Subjects: | |
| Online Access: | http://ir.unimas.my/id/eprint/17416/ http://ir.unimas.my/id/eprint/17416/1/Government%20Intervention%20in%20the%20Economy%20%28abstract%29.pdf |
| Summary: | Using Malaysia as a case study, this paper investigates the conduct of
fiscal policy regimes during the last three decades. Empirical results
show that in pre-crisis Malaysia the fiscal stance is not sustainable,
while in the full sampling period (including the post-1997 crisis era) it
satisfies only the necessary condition for sustainability. Long-run oneway
causation from expenditure to revenue was observed, in line with
the spend-and-tax hypothesis. The Malaysian government, therefore,
must aim to reduce the size of government spending and promote a costeffective
expenditure program with maximum benefits, to moderate
the post-crisis fiscal imbalances |
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