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The Impacts of Monetary and Fiscal Policies on Economic Growth in Malaysia, Singapore and Thailand

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  • Chai-Thing Tan
  • Azali Mohamed
  • Muzafar Shah Habibullah
  • Lee Chin

Abstract

This article analyses the impact of monetary and fiscal policies on economic growth in Malaysia, Singapore and Thailand from 1980:Q1 to 2017:Q1. Autoregressive distributed lag (ARDL) approach is employed to determine the long-run relationship. Further, a range of econometric models, such as fully modified least squares method (FMOLS), canonical cointegration regression (CCR) and dynamic ordinary least squares method (DOLS), are applied to check the robustness. The results are stable and robust as all the models yield consistency result. The main findings in this study demonstrate that: (a) interest rate had a negative impact on economic growth in three selected countries. (b) Government spending had a negative impact on economic growth in Malaysia and Singapore, but had a positive impact in Thailand. (c) Monetary policy is more effective in Malaysia and Singapore, while fiscal policy is more effective in Thailand. JEL Classification: E52, E58, E62, C01

Suggested Citation

  • Chai-Thing Tan & Azali Mohamed & Muzafar Shah Habibullah & Lee Chin, 2020. "The Impacts of Monetary and Fiscal Policies on Economic Growth in Malaysia, Singapore and Thailand," South Asian Journal of Macroeconomics and Public Finance, , vol. 9(1), pages 114-130, June.
    • Handle: RePEc:sae:smppub:v:9:y:2020:i:1:p:114-130
    DOI: 10.1177/2277978720906066
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    References listed on IDEAS

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    1. Tatiana Kirsanova & Campbell Leith & Simon Wren‐Lewis, 2009. "Monetary and Fiscal Policy Interaction: The Current Consensus Assignment in the Light of Recent Developments," Economic Journal, Royal Economic Society, vol. 119(541), pages 482-496, November.
    2. Ergin Akalpler & Dilgash Duhok, 2018. "Does monetary policy affect economic growth: evidence from Malaysia," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 34(1), pages 2-20, February.
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    Cited by:

    1. Sim, Chong Yang, 2021. "A Review on Output-Inflation Trade-off Based on New Classical and New Keynesian Theories," MPRA Paper 105767, University Library of Munich, Germany.
    2. Maran Marimuthu & Hanana Khan & Romana Bangash, 2021. "Is the Fiscal Deficit of ASEAN Alarming? Evidence from Fiscal Deficit Consequences and Contribution towards Sustainable Economic Growth," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    3. Mariam Abbas Soharwardi & Javeria Sarwar & Muhammad Imran Khan & Mariam Miraj, 2022. "Fiscal and Monetary Policy Dilemma in Pakistan to Support Economic Growth," Journal of Economic Impact, Science Impact Publishers, vol. 4(3), pages 233-243.

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    More about this item

    Keywords

    Monetary policy; fiscal policy; ARDL; FMOLS; CCR; DOLS;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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