UPSI Digital Repository (UDRep)
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Abstract : Universiti Pendidikan Sultan Idris |
This study has been carried out to investigate the relationship between government debt and
economic growth based on GDP per capita. Government expenditure and household expenditure
also has been used as other independent variable. This study also investigates the long run and
short run between those dependent variables with GDP per capita in Malaysia. This study used
secondary data by collecting time series data along 1985 till 2017 that is within 32 years. The data
is collected from the World Bank Data, Bank Negara Malaysia and International Monetary Fund,
IMF. Autoregressive Distributed Lag (ARDL) model is applied in this study to examine the
relationship between debt and economic growth. The results shows that there is a long- and shortterm
relationship for all the variables. Government debt reveals that in the long run, it has a positive
relationship and significant with the GDP. These empirical results are in line with prior empirical
research that looked at the effect of government debt on GDP growth and suggested that debt
stimulates economic activity. Although debt is said to have a negative impact on the country's
growth, but if the debt incurred does not exceed the threshold level set, then the national debt is
able to help finance the country's expenditure in excess of tax collection. |
References |
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