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

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.