Assessing the Framework of Government Expenditure and Economic Wellbeing: A Comparison Study Between Malaysia, Japan, and South Korea


Mohd Aznan, Muhammad Syawal and Goh, Han Hwa and Tan, Sooi Hooi (2022) Assessing the Framework of Government Expenditure and Economic Wellbeing: A Comparison Study Between Malaysia, Japan, and South Korea. In: Postgraduate Social Science Colloquium 2022, 1 - 2 June 2022, Online.

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Background - Government expenditure is presumed to has a positive outcome toward the economy. However, recent studies indicate that too large of government size has the effect of slowing down economic growth. Recent research also indicate that different component of government expenditure has a different effect on economic well-being in the long run. Purpose - This study aims to find the optimal sizes of government expenditure that maximise the economic growth including government operating expenditure and investment expenditure. Design/methodology/approach - This research sits on the positivistic research paradigm and used quantitative approach to close the gap in the research problem. The research is based on the Armey curve which indicate that economic growth and government size has a nonlinear relationship and optimal government size can be achieved. The optimal sizes can be achieved using Ram’s (1986) model and extending the model with Threshold Autoregressive (TAR) model that introduced by Hansen (2000). The research used the data on economic growth, labour force growth, investment rate, government size, and trade openness to find the optimal government size. This research analyses the data from 2000 quarter 1 to 2019 quarter 4 for Malaysia, Japan, and South Korea. Findings/Expected Contributions - The research contributes to the literature by inclusion of international trade into enhanced threshold model of Chen and Lee (2005). The study also may provide the policymakers in-depth understanding the long-term influence of government size toward economic growth in Malaysia. Research limitations - The research is limited to the amount of data available for Malaysia and thus limiting the number of observations of Japan and South Korea Originality/value - This research is done to find the optimal point where the government has the most externalities toward economic growth directly or indirectly through the private sector

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: Economic Growth, Government Size, Armey Curve, Threshold Autoregressive Model
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD72-88 Economic growth, development, planning
Divisions: Faculty of Management (FOM)
Depositing User: Ms Rosnani Abd Wahab
Date Deposited: 15 Aug 2022 02:51
Last Modified: 15 Aug 2022 02:51


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