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Shock and economic growth in Malaysia

The objective of the study is to examine shocks and economic growth using an a-theoretical approach. An a-theoretical framework for studying shocks and economic growth was possible through the use of VAR method.We performed stationarity, causality and cointegration tests in order to achieve an appro...

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Main Authors: Dahalan, Jauhari, Mohd Mustafa, Muszafarshah
Format: Monograph
Language:English
English
Published: Universiti Utara Malaysia 2010
Subjects:
HC Economic History and Conditions
Online Access:http://repo.uum.edu.my/8101/1/Jau.pdf
http://repo.uum.edu.my/8101/3/1.Jauhari%20Dahalan.pdf
http://repo.uum.edu.my/8101/
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spelling my.uum.repo.81012016-04-24T08:42:16Z http://repo.uum.edu.my/8101/ Shock and economic growth in Malaysia Dahalan, Jauhari Mohd Mustafa, Muszafarshah HC Economic History and Conditions The objective of the study is to examine shocks and economic growth using an a-theoretical approach. An a-theoretical framework for studying shocks and economic growth was possible through the use of VAR method.We performed stationarity, causality and cointegration tests in order to achieve an appropriate model specification in estimating real relationships among the selected variables. The unitroot tests found that all except one of the variables were nonstationary and were integrated of order one, I(1).The Granger causality tests found broad money supply, real exchange rate and inflation were Granger caused by variables neither jointly nor individually.We implemented the Johansen cointegration procedure to test for cointegration.The test found one cointegrating relationships among the variables, which implied that the system was stable in one way.Based on the test results, a cointegrated VAR approach was used to analyse relationships among variables using the system’s responses to random shocks.This analysis formed the basis of discussion of the economic implications.This study found that fiscal policy did provide the necessary impetus to improve growth over the long term, but monetary policy did not result in the expected direction of effect.It was found that investment expenditure by government was sufficient to cause a significant long term economic growth. There was a lack of clarity on the effects of monetary policy changes as a result of dual objectives of the policy, price control and maintenance of the exchange rate.Given the lack of clarity, over emphasis on inflation control may not be desirable as a result of the constraint placed on economic growth. Additional insights on the effects of monetary policy are necessary through a detailed study using a similar empirical method.In addition, trade was found to be a significant source of economic growth.A focus of policy on trade development can be expected to contribute to economic development in the long term. Universiti Utara Malaysia 2010-10 Monograph NonPeerReviewed application/pdf en http://repo.uum.edu.my/8101/1/Jau.pdf application/pdf en http://repo.uum.edu.my/8101/3/1.Jauhari%20Dahalan.pdf Dahalan, Jauhari and Mohd Mustafa, Muszafarshah (2010) Shock and economic growth in Malaysia. Project Report. Universiti Utara Malaysia. (Unpublished)
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutionali Repository
url_provider http://repo.uum.edu.my/
language English
English
topic HC Economic History and Conditions
spellingShingle HC Economic History and Conditions
Dahalan, Jauhari
Mohd Mustafa, Muszafarshah
Shock and economic growth in Malaysia
description The objective of the study is to examine shocks and economic growth using an a-theoretical approach. An a-theoretical framework for studying shocks and economic growth was possible through the use of VAR method.We performed stationarity, causality and cointegration tests in order to achieve an appropriate model specification in estimating real relationships among the selected variables. The unitroot tests found that all except one of the variables were nonstationary and were integrated of order one, I(1).The Granger causality tests found broad money supply, real exchange rate and inflation were Granger caused by variables neither jointly nor individually.We implemented the Johansen cointegration procedure to test for cointegration.The test found one cointegrating relationships among the variables, which implied that the system was stable in one way.Based on the test results, a cointegrated VAR approach was used to analyse relationships among variables using the system’s responses to random shocks.This analysis formed the basis of discussion of the economic implications.This study found that fiscal policy did provide the necessary impetus to improve growth over the long term, but monetary policy did not result in the expected direction of effect.It was found that investment expenditure by government was sufficient to cause a significant long term economic growth. There was a lack of clarity on the effects of monetary policy changes as a result of dual objectives of the policy, price control and maintenance of the exchange rate.Given the lack of clarity, over emphasis on inflation control may not be desirable as a result of the constraint placed on economic growth. Additional insights on the effects of monetary policy are necessary through a detailed study using a similar empirical method.In addition, trade was found to be a significant source of economic growth.A focus of policy on trade development can be expected to contribute to economic development in the long term.
format Monograph
author Dahalan, Jauhari
Mohd Mustafa, Muszafarshah
author_facet Dahalan, Jauhari
Mohd Mustafa, Muszafarshah
author_sort Dahalan, Jauhari
title Shock and economic growth in Malaysia
title_short Shock and economic growth in Malaysia
title_full Shock and economic growth in Malaysia
title_fullStr Shock and economic growth in Malaysia
title_full_unstemmed Shock and economic growth in Malaysia
title_sort shock and economic growth in malaysia
publisher Universiti Utara Malaysia
publishDate 2010
url http://repo.uum.edu.my/8101/1/Jau.pdf
http://repo.uum.edu.my/8101/3/1.Jauhari%20Dahalan.pdf
http://repo.uum.edu.my/8101/
_version_ 1644279734191783936
score 13.211869

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