Estimating fiscal reaction functions in Malaysia, Thailand and the Philippines
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...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2018
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| Online Access: | http://journalarticle.ukm.my/19625/1/jeko_521-6.pdf http://journalarticle.ukm.my/19625/ https://www.ukm.my/jem/issue/v52i1/ |
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| Institution: | Universiti Kebangsaan Malaysia |
| Language: | English |
| Summary: | 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. |
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