Open AccessTHE IMPACT OF FISCAL POLICY ON GDP PER CAPITA: EVIDENCE FROM MALAYSIA
Author(s) -
Nabilah İsmail,
Abdallah El Moctar El Houssein
Publication year - 2020
Publication title -
international journal of politics, public policy and social works
Language(s) - English
Resource type - Journals
ISSN - 2637-0980
DOI - 10.35631/ijppsw.25002
Subject(s) - economics , per capita , consumption (sociology) , government spending , government (linguistics) , government expenditure , per capita income , inflation (cosmology) , distributed lag , demographic economics , macroeconomics , public finance , econometrics , social science , population , linguistics , philosophy , demography , physics , sociology , theoretical physics , welfare , market economy
This study investigated the relationship between income per capita and government spending in Malaysia using annual data spanning from 1980-2018. Auto-regressive distributed lag (ARDL) and VAR-differenced model (VECM) was employed to examine the relationship between income per capita, government consumption, and government expenditure on education. Inflation is used as a control variable in the model. The result concluded that government consumption, government expenditure in education, and inflation have a unidirectional short-run causal effect on income per capita. In the long run, income per capita has a negative relationship with government consumption spending, while has a positive relationship with government expenditure in education. Government expenditure in education is crucially important in Malaysia and it should be continued to give more opportunities for Malaysians to get a better education and as a result, get a better job and improve the standard of living.