Testing Budget Sustainability In Malaysia

Siti Khadijah, Inhadel (2015) Testing Budget Sustainability In Malaysia. [Final Year Project Report] (Unpublished)

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Abstract

This study looks at the maintainability or sustainability of the budget position of Malaysia amid the time of 1982 until 2013. Utilizing the typical intertemporal borrowing constraints as a framework, the study tests the long run relationship between government revenue, government expenditure and real gross domestic product. The empirical result demonstrates that long-run relationship exists among variables utilized. The cointegration result recommends that Malaysia's fiscal stance fulfill the weak sustainability condition. Other than that, the Granger causality result shows that there is short-run relationship among government revenue, government expenditure and real gross domestic product. Having said that, it is clear that the Malaysian government would consider the marginal cost and revenue when forming a choice in deciding the fitting level of government consumption and revenue to advantage the nation's economy.

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