Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views

V G R Chandran Govindaraju; R Rao; Sajid Anwar

doi:10.1007/s10644-010-9099-z

Back

Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views

Journal article

Peer reviewed

Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views

V G R Chandran Govindaraju, R Rao and Sajid Anwar

Economic Change and Restructuring, Vol.44(3), pp.203-219

2011

DOI: https://doi.org/10.1007/s10644-010-9099-z

Files and links (1)

url

https://doi.org/10.1007/s10644-010-9099-zView

Published Version

Abstract

ARDL bounds approach

spending on education

GDP growth

Malaysia

government spending

By making use of annual data from Malaysia for the period 1970 to 2006, this paper examines Wagner's law and the Keynesian hypothesis concerning the link between real government spending and real GDP. Unlike most existing studies, we utilize both a bivariate and a multivariate model. In addition, we consider two cases: one that focuses on the link between aggregate government spending and GDP and the other where the link between government spending on education and GDP is considered. The use of a multivariate model serves to reduce the problem of serious misspecification which appears to have been ignored by most existing studies. The presence of cointegration is investigated by means of Auto Regressive Distributed Lag (ARDL) approach. This approach also allows one to distinguish between the short and the long-run relationships. Within the context of a bivariate model, our empirical analysis reveals that aggregate government spending Granger causes the real GDP which supports Wagner's law. However, in a multivariate framework, we found support for the Keynesian hypothesis suggesting that omitted variables bias can significantly alter the validity of Wagner's law.

Details

Title: Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views
Authors: V G R Chandran Govindaraju (Author) - Universiti Teknologi Mara, Malaysia
R Rao (Author) - University of Malaya, Malaysia
Sajid Anwar (Author) - University of the Sunshine Coast - Faculty of Business
Publication details: Economic Change and Restructuring, Vol.44(3), pp.203-219
Publisher: Springer New York LLC
Date published: 2011
DOI: 10.1007/s10644-010-9099-z
ISSN: 1573-9414
Organisation Unit: School of Business and Creative Industries; Indigenous and Transcultural Research Centre; University of the Sunshine Coast, Queensland; USC Business School - Legacy
Language: English
Record Identifier: 99450110902621
Output Type: Journal article

Metrics

3 File views/ downloads

1084 Record Views

18 Times Cited - Web of Science

InCites Highlights

These are selected metrics from InCites Benchmarking & Analytics tool, related to this output

Collaboration types: Domestic collaboration; International collaboration
Web Of Science research areas: Economics

UN Sustainable Development Goals (SDGs)

This output has contributed to the advancement of the following goals:

Source: InCites