External Debt and Macroeconomics Indicators: Evidence from Malaysia

Lee, Alvina Syn-Yee and Lau, Evan and Mohammad Affendy, Arip (2014) External Debt and Macroeconomics Indicators: Evidence from Malaysia. In: Proceedings of 26th International Business Research Conference, 7 - 8 April 2014, Imperial College, London, UK.


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The management of debt has always been one of the central concerns in the small open economy like Malaysia. This study seeks to re-examine whether the macroeconomic indicators contributed to the external debt in Malaysia. Utilizing Malaysia data from 1970 to 2011, the results indicate the existence of short run causality linkages between the external debt and the macroeconomic indicators. Further dynamic econometric analysis indicates that quasi money (M2) to be the most exogenous variable beyond the sample for the next 50 years. This implies that policymakers could focus on the monetary variables in assisting and managing external debt level in the long run. Malaysia should develop a debt governance program for pursuit of debt-targeting policies or rules to enhance sound public finance systems which is crucial for Malaysia to achieve solvency in external debt positions in the near future.

Item Type: Proceeding (Paper)
Uncontrolled Keywords: External Debt, Macroeconomic Indicators, unimas, university, universiti, Borneo, Malaysia, Sarawak, Kuching, Samarahan, ipta, education, research, Universiti Malaysia Sarawak
Subjects: H Social Sciences > HB Economic Theory
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Depositing User: Ab Rahim
Date Deposited: 20 Nov 2017 04:41
Last Modified: 20 Nov 2017 04:41
URI: http://ir.unimas.my/id/eprint/18664

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