Testing the relationship between government expenditure and national income in Malaysia

The present study aims to investigate the relationship between national income and Government expenditure in Malaysia. The annual data over the period 1960 to 1998 were used. The result of Johansen multivariate cointegration revealed that no long run relationship among the non-stationary variables existed. Further, a unidirectional causality was observed, that is, from national income growth to Government expenditure growth. Thus, Wagner's law is supported by the data, in the short run. Some relevant policy issues and implications are discussed

Real Exchange Rates and Real Interest Differentials: The Case of a Transitional Economy - Cambodia

This study examines the existence of long-run equilibrium relationship between the Cambodia’s real exchange rates and real interest differentials. The results of cointegration tests (i.e. Engle-Granger tests, and Johansen’s multivariate tests without and with structural breaks) show that these variables are cointegrated over the sample period of November 1994 - August 2009. This empirical finding illustrates the fundamental understanding of the role of real interest differential in determining real exchange rates in Cambodia, and it is useful for policy considerations.Cambodia; Real exchange rates; Real interest differentials

Wagner’s Law versus Keynesian Hypothesis in Malaysia: An Impressionistic View

This article refreshes the inter-relationships between government spending and economic growth in Malaysia. The contribution of this article provides a better understanding of the application of Keynesian and Wagnerian hypotheses in the following aspects – (1) literature review; (2) conceptual review on government expenditure-economic growth nexus; and (3) empirical results.Government expenditure; Economic growth

CURRENT AND CAPITAL ACCOUNT INTERDEPENDENCE: AN EMPIRICAL TEST

This study uses two alternative specifications to test the interdependence between the current and capital accounts of the balance of payments. The empirical specifications, derived from the balance of payments constraint and from national income accounting relationships, respectively, yield consistent support for the interdependence hypothesis. The balance of payments specification returns positive findings for nine of the ten sample countries. These are corroborated by the general equilibrium specification in three instances. Neglect of the comprehensive lag structure of the underlying model may account for the relatively weak support from the general equilibrium specification of the interdependence hypothesis.Current account; Capital account; Developing countries; G-5; Interdependence

AN EMPIRICAL INVESTIGATION ON THE SUSTAINABILITY OF BALANCING ITEM OF BALANCE OF PAYMENT ACCOUNTS FOR OIC MEMBER COUNTRIES

This study aims to examine the sustainability of balancing item (???net errors and omissions') of balance of payment accounts for OIC (Organisation of the Islamic Conference) member countries. The series specific panel unit root test (SURADF unit root tests) suggest that 9 out of 23 sampled OIC member countries have their balancing item sustainable - Albania, Coted???Ivoire, Indonesia, Kuwait, Malaysia, Mozambique, Pakistan, Tunisia, and Uganda.Balancing Item (Net Errors and Omissions); Organisation of the Islamic Conference (OIC); Sustainability

Twin deficits in Cambodia: An Empirical Study

This study examines the inter-linkages between Government budget balance, and external balance for a transition economy in South East Asia – Cambodia. The empirical results of the quarterly data between 1996 and 2006, support twin deficits hypothesis that is the budget deficits do cause external deficits, in the short run. These two macroeconomics variables are moving together in the long run. For implication, these findings provide an insight for the Cambodia''s policy design and formulation.Budget Deficits Cambodia Current Account Deficit Unit Root Tests

Twin deficits in Cambodia: Are there Reasons for Concern? An Empirical Study

This study examines the inter-linkages between Government budget balance, and external balance for a transition economy in South East Asia – Cambodia. The empirical results of the quarterly data between 1996 and 2006, support twin deficits hypothesis that is the budget deficits do cause external deficits, in the short run. These two macroeconomics variables are moving together in the long run. For implication, these findings provide an insight for the Cambodia’s policy design and formulation.Budget Deficits; Cambodia; Current Account Deficit; Unit Root Tests

General Equilibrium Perception on Twin Deficits Hypothesis: An Empirical Evidence for the U.S.

From the general equilibrium perceptive, this study proposes the inclusion of private savings and investments in examining twin deficits hypothesis. Using U.S. data, the empirical results support twin deficits hypothesis but the budget deficit’s elasticity is decreasing from unity to 0.43.General Equilibrium; Government Budget Deficits; Current Account Balance; U.S.

Are Malaysian exports and imports cointegrated? A comment

This commentary aims to provide an insight on the work by Choong, Soo and Zulkornain Yusop (2004), which appeared in the inaugural issue of this journal. The study has found a long-run relationship (cointegration) between Malaysian imports and exports for the annual period 1959?2000. An empirical illustration in this commentary reveals that a cointegration between Malaysian exports and imports as documented by CSZ requires further investigation before it can be generalized

EXCHANGE RATE VARIABILITY AND THE EXPORT DEMAND FOR MALAYSIA'S SEMICONDUCTORS: AN EMPIRICAL STUDY

This paper examines the effects of exchange rate variability on export demand for semiconductors, which is the largest sub-sector of electronics industry in Malaysia as reported by MIDA (Malaysian Industrial Development Authority, 2004). The empirical results, which are estimated based on the Johansen’s multivariate co-integration tests and error correction model, suggest that there is a unique long-run relationship among quantities of export, relative price, real foreign income, and real exchange rate variability. The major finding of this paper is that the variability of real exchange rate has some effect on semiconductor exports in both the long-run and the short-run. In the light of rapid advances in technology in the global markets for electronics products, the findings are useful to policy makers for the design and target of appropriate exchange rate and industrial policies to enhance the export competitiveness of semiconductor industry.Exchange rate volatility; semiconductor exports; Malaysia;