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Does education expenditure lead or lag GDP ? Malaysian evidence

Azmi, Muhammad Saifullah and Masih, Mansur (2018): Does education expenditure lead or lag GDP ? Malaysian evidence.

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Abstract

This study focuses on the lead-lag relationship between education expenditure and GDP. Malaysia is taken as a case study. Given numerous initiatives and efforts introduced by the government to develop the education sector, it is interesting to investigate whether GDP drives education expenditure or the other way around. Based on rigorous methodology of standard time series techniques, in particular the Generalized variance decompositions (GVDC), the estimates tend to indicate that it is the GDP that is driving education expenditure and not the other way around. This finding is plausible and has strong policy implications for a developing country like Malaysia. Therefore, the budget and policies on education expenditure would be driven and determined by the overall economic performance embodied in GDP.

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