Short run and long run Ricardian equivalence: an evidence from Malaysia
This paper aims to test the validity of Ricardian equivalence in Malaysian economy with respect to the behavior of government debt and government spending on private consumption. To conduct the test, we choose Giorgioni and Holden (2003) model based on Bernheim (1987) model modifications. Auto-Regre...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Universiti Putra Malaysia Press
2013
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| Online Access: | http://psasir.upm.edu.my/id/eprint/40706/ http://psasir.upm.edu.my/id/eprint/40706/1/05%20Page%2067-80.pdf |
| _version_ | 1848849502338809856 |
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| author | Abd Rahman, Muhammad Daaniyall Law, Siong Hook Mohd Noor, Zaleha |
| author_facet | Abd Rahman, Muhammad Daaniyall Law, Siong Hook Mohd Noor, Zaleha |
| author_sort | Abd Rahman, Muhammad Daaniyall |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This paper aims to test the validity of Ricardian equivalence in Malaysian economy with respect to the behavior of government debt and government spending on private consumption. To conduct the test, we choose Giorgioni and Holden (2003) model based on Bernheim (1987) model modifications. Auto-Regressive Distributed Lags (ARDL) Bounds test approach is employed to estimate the model in order to capture the hypothesis existence both in short run and long run. Consequently, the results show that the existence of Ricardian equivalence hypothesis is statistically rejected both cases. It also shows that Malaysians perceive government debt as net wealth and the government spending itself gives complementarity effect on private consumption. Therefore, Malaysian fiscal policy is a good macroeconomic stabilization tool to foster incessant economic growth. |
| first_indexed | 2025-11-15T09:51:25Z |
| format | Article |
| id | upm-40706 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T09:51:25Z |
| publishDate | 2013 |
| publisher | Universiti Putra Malaysia Press |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-407062015-12-04T00:42:42Z http://psasir.upm.edu.my/id/eprint/40706/ Short run and long run Ricardian equivalence: an evidence from Malaysia Abd Rahman, Muhammad Daaniyall Law, Siong Hook Mohd Noor, Zaleha This paper aims to test the validity of Ricardian equivalence in Malaysian economy with respect to the behavior of government debt and government spending on private consumption. To conduct the test, we choose Giorgioni and Holden (2003) model based on Bernheim (1987) model modifications. Auto-Regressive Distributed Lags (ARDL) Bounds test approach is employed to estimate the model in order to capture the hypothesis existence both in short run and long run. Consequently, the results show that the existence of Ricardian equivalence hypothesis is statistically rejected both cases. It also shows that Malaysians perceive government debt as net wealth and the government spending itself gives complementarity effect on private consumption. Therefore, Malaysian fiscal policy is a good macroeconomic stabilization tool to foster incessant economic growth. Universiti Putra Malaysia Press 2013-09 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/40706/1/05%20Page%2067-80.pdf Abd Rahman, Muhammad Daaniyall and Law, Siong Hook and Mohd Noor, Zaleha (2013) Short run and long run Ricardian equivalence: an evidence from Malaysia. Pertanika Journal of Social Sciences & Humanities, 21 (spec. Sep.). pp. 67-80. ISSN 0128-7702; ESSN: 2231-8534 http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2021%20%28S%29%20Sep.%202013/05%20Page%2067-80.pdf |
| spellingShingle | Abd Rahman, Muhammad Daaniyall Law, Siong Hook Mohd Noor, Zaleha Short run and long run Ricardian equivalence: an evidence from Malaysia |
| title | Short run and long run Ricardian equivalence: an evidence from Malaysia |
| title_full | Short run and long run Ricardian equivalence: an evidence from Malaysia |
| title_fullStr | Short run and long run Ricardian equivalence: an evidence from Malaysia |
| title_full_unstemmed | Short run and long run Ricardian equivalence: an evidence from Malaysia |
| title_short | Short run and long run Ricardian equivalence: an evidence from Malaysia |
| title_sort | short run and long run ricardian equivalence: an evidence from malaysia |
| url | http://psasir.upm.edu.my/id/eprint/40706/ http://psasir.upm.edu.my/id/eprint/40706/ http://psasir.upm.edu.my/id/eprint/40706/1/05%20Page%2067-80.pdf |