The impact of government debt on output growth, private investment and human capital in Malaysia
It is important for every country to evaluate the role of government debt on economic growth and macroeconomic factors, especially in developing economies. Some endogenous growth theories predict that if government debt at moderate level is spent on development expenditures such as public infrastruc...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Faculty of Economics and Management, Universiti Putra Malaysia
2018
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| Online Access: | http://psasir.upm.edu.my/id/eprint/16087/1/7%29%20Impact%20of%20Government%20Debt.pdf |
| _version_ | 1796968983474208768 |
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| author | Hajian, Hoda Kaliappan, Shivee Ranjanee |
| author_facet | Hajian, Hoda Kaliappan, Shivee Ranjanee |
| author_sort | Hajian, Hoda |
| collection | UPM |
| description | It is important for every country to evaluate the role of government debt on economic growth and macroeconomic factors, especially in developing economies. Some endogenous growth theories predict that if government debt at moderate level is spent on development expenditures such as public infrastructure and human capital – as is the case in Malaysia – it can crowd-in private investment, human capital and economic growth. This paper aims to examine the effect of government debt on output growth, private investment and human capital in Malaysia during the period of 1985-2016, employing Vector Error Correction modeling (VECM) and Generalized Impulse Response (GIR). The result shows that government debt generates positive response in GDP growth and human capital in the long run although not significant. Moreover, the effect on private investment is null. This finding supports prudent debt management in Malaysia. Accordingly, the policy implication would be to focus on more efficient usage and allocation of the government funds, based on the country’s priorities, while maintaining the debt within the dominant past range. |
| first_indexed | 2024-03-06T07:36:18Z |
| format | Article |
| id | upm.eprints-16087 |
| institution | Universiti Putra Malaysia |
| language | English |
| last_indexed | 2024-03-06T07:36:18Z |
| publishDate | 2018 |
| publisher | Faculty of Economics and Management, Universiti Putra Malaysia |
| record_format | dspace |
| spelling | upm.eprints-160872019-11-12T06:50:44Z http://psasir.upm.edu.my/id/eprint/16087/ The impact of government debt on output growth, private investment and human capital in Malaysia Hajian, Hoda Kaliappan, Shivee Ranjanee It is important for every country to evaluate the role of government debt on economic growth and macroeconomic factors, especially in developing economies. Some endogenous growth theories predict that if government debt at moderate level is spent on development expenditures such as public infrastructure and human capital – as is the case in Malaysia – it can crowd-in private investment, human capital and economic growth. This paper aims to examine the effect of government debt on output growth, private investment and human capital in Malaysia during the period of 1985-2016, employing Vector Error Correction modeling (VECM) and Generalized Impulse Response (GIR). The result shows that government debt generates positive response in GDP growth and human capital in the long run although not significant. Moreover, the effect on private investment is null. This finding supports prudent debt management in Malaysia. Accordingly, the policy implication would be to focus on more efficient usage and allocation of the government funds, based on the country’s priorities, while maintaining the debt within the dominant past range. Faculty of Economics and Management, Universiti Putra Malaysia 2018 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/16087/1/7%29%20Impact%20of%20Government%20Debt.pdf Hajian, Hoda and Kaliappan, Shivee Ranjanee (2018) The impact of government debt on output growth, private investment and human capital in Malaysia. International Journal of Economics and Management, 12 (spec. 2). pp. 387-399. ISSN 1823-836X; ESSN: 2600-9390 http://www.ijem.upm.edu.my/vol12_noS2/7)%20Impact%20of%20Government%20Debt.pdf |
| spellingShingle | Hajian, Hoda Kaliappan, Shivee Ranjanee The impact of government debt on output growth, private investment and human capital in Malaysia |
| title | The impact of government debt on output growth, private investment and human capital in Malaysia |
| title_full | The impact of government debt on output growth, private investment and human capital in Malaysia |
| title_fullStr | The impact of government debt on output growth, private investment and human capital in Malaysia |
| title_full_unstemmed | The impact of government debt on output growth, private investment and human capital in Malaysia |
| title_short | The impact of government debt on output growth, private investment and human capital in Malaysia |
| title_sort | impact of government debt on output growth private investment and human capital in malaysia |
| url | http://psasir.upm.edu.my/id/eprint/16087/1/7%29%20Impact%20of%20Government%20Debt.pdf |
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