Non-linear effects of fiscal adjustments on output growth: Does uncertain environment matter?

Soon, Siew Voon (2019) Non-linear effects of fiscal adjustments on output growth: Does uncertain environment matter? In: 15th International Symposium on Econometric Theory and Applications (SETA) 2019, 1-2 June 2019, Osaka University, Tokyo, Japan.

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Abstract

This paper proposes a Markov-switching model to assess the fiscal adjustments for the period 1990Q1-2018Q3. Our results indicate that the output growth response asymmetry to the change in the budget position only during stable regime. The positive change in the budget position dampens the output growth. It switches from negative effect to positive effect when there is an improvement in the budget position. The role of the fiscal adjustment only a short-run phenomenon and state dependence. However, the uncertainty in the country found temporary increase the output growth, but it is a threat to the country in the long-term.

Item Type: Conference or Workshop Item (Paper)
Additional Information: Conference paper
Uncontrolled Keywords: Markov-switching model; output growth; budget; fiscal adjustments; economic growth
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HB Economic Theory
Divisions: Faculty of Economics & Administration
Depositing User: Mr. Mohd Safri
Date Deposited: 06 Aug 2019 06:22
Last Modified: 06 Aug 2019 06:24
URI: http://eprints.um.edu.my/id/eprint/21581

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