An Econometric Appraisal of Single Currency Model on Asian Countries.
This project paper investigates empirically the relationship between the Maastricht Convergence Criteria involves inflation rate, deficit per GDP, and debt per GDP, with the GDP per capita growth rate in seven Asian countries - Indonesia, Malaysia, The Philippines, Singapore, Thailand, Japan, and...
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| Format: | Project Paper Report |
| Language: | English English |
| Published: |
2005
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| Online Access: | http://psasir.upm.edu.my/id/eprint/6075/ http://psasir.upm.edu.my/id/eprint/6075/1/FEP_2005_10%281-24%29.pdf |
| Summary: | This project paper investigates empirically the relationship between the
Maastricht Convergence Criteria involves inflation rate, deficit per GDP, and debt per
GDP, with the GDP per capita growth rate in seven Asian countries - Indonesia,
Malaysia, The Philippines, Singapore, Thailand, Japan, and Korea - over the period 1970
to 2004. Recent development methods of multivariate cointegration analysis followed by
vector error-correction modeling were undertaken. The empirical results of the analysis
suggest that there is a long run relationship between the Maastricht Convergence Criteria
and GDP per capita growth rate for each country. In addition, the results fiom long-run
equilibrium estimates show that the Maastricht Convergence Criteria, especially deficit
per GDP and debt per GDP have significant negative impact on economic growth in most
of the Asian economies. These results are quite consistent with the work by Afientiou
and Serletis (2000) in which indicated that the Maastricht Convergence Criteria should
have an adverse effect in promoting economic growth. The most interesting finding from
the results of Granger-causality test is the exogeneity of debt per GDP among the
Maastricht Convergence Criteria. In most cases, debt per GDP is found to be exogenous.
Therefore, these findings are consistent to the results of long-run equilibrium estimates in
which support that deficit per GDP and debt per GDP, in particular, is the significant
policy instruments to stimulate economic growth. |
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