Main Article Content
Abstract
Since the financial crisis occurred in the mid of 1997, generally the government of Asian countries have difficulties in supporting their economic growth. This paper attempts to analyze the relationship between fiscal variables, including government expenditure, revenue and output in Malaysia and Indonesia. The relationship between government expenditure and revenue will be tested by co integration and causality test, meanwhile the effect of gov-ernment expenditure and revenue on output will be tested using Vector Error Correction Model (VECM). The result shows that there are strongly long run relationship between fiscal variables and output in these two countries. More active fiscal policy is recommended in Malaysia, meanwhile a better fiscal management must be applied in Indonesia.
Key words: Co integration, Causality, Error Correction Model, Fiscal policy.
Key words: Co integration, Causality, Error Correction Model, Fiscal policy.
Article Details
License
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
Economic Journal of Emerging Markets by Center for Economic Studies, Universitas Islam Indonesia is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
How to Cite
Sriyana, J. (2009). Fiscal Policy And Economic Growth: And Empirical Evidence In Malaysia And Indonesia. Economic Journal of Emerging Markets, 7(2). https://doi.org/10.20885/ejem.v7i2.647