• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing: Engineering & Technology Digital Library, ProQuest, Crossref, Electronic Journals Library, DOAJ , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2012 Vol.3(4): 323-326 ISSN: 2010-023X
DOI: 10.7763/IJTEF.2012.V3.220

How Federal Government’s Debt Affect the Level of Economic Growth?

Nur Hayati Abd Rahman
Abstract—This paper examines the impact of federal government’s debt on the level of economic growth particularly in Malaysia. By using quarterly data from the first quarter of 2000 until the fourth quarter of 2011, it was found that high domestic debt does have negative impact on the level of economic growth in the long-run. However, the level of external debt has no significant influence in changing the economic growth within the same time frame. From the short-run perspective, both domestic and external debts have no significant impact on the level of economic growth. Nevertheless, if there is any shock in the current economic condition, the real GDP is able to restore its equilibrium level in the short-run.

Index Terms—Budget Deficit, Domestic Debt, External Debt, Federal Government’s Debt.

The author is with the Universiti Teknologi MARA (Terengganu), Dungun, 23000 Terengganu (e-mail: nurhayati@tganu.uitm.edu.my).

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Cite:Nur Hayati Abd Rahman, "How Federal Government’s Debt Affect the Level of Economic Growth?," International Journal of Trade, Economics and Finance vol.3, no.4, pp. 323-326, 2012.

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