The determinants of economic growth: the Malaysian case

Ali, Shah and Masih, Mansur (2018): The determinants of economic growth: the Malaysian case.

Abstract

This paper investigates the factors that stimulate and enhance economic growth. The determinant factors studied are consumer price index, stock market index, gross domestic growth, export and housing price index. This study uses the time series techniques to analyze the relationship between economic growth and the determinant factors. The results of this study tend to indicate that there exists a long-run cointegrating relationship and multiple short-run causal relationships between economic growth and the determinant factors. Overall, findings show that all the determinant factors (combined determinant factors) cause economic growth in the short-run. However, individual tests indicate that only asset prices (stock prices) and consumer good prices cause economic growth, while this is less so for housing prices, commodity prices and real production. The study concludes that asset prices and consumer good prices play important roles as determinant factors of economic growth, whereas, commodity prices, housing prices and real production may have a role as a catalyst and complementary determinant factors to economic growth in Malaysia. This study contributes to the formulation of both the monetary and fiscal policies at least in the context of Malaysia.

• Item Type: MPRA Paper
• Language: English
• Keywords: Determinants of economic growth, VECM, VDC, Malaysia
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C58 - Financial Econometrics; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy

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