The Effects of Selected Macroeconomic Variables on Economic Growth in Malaysia

Yew, Mun Fei (2018) The Effects of Selected Macroeconomic Variables on Economic Growth in Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Government expenditure, inflation and trade openness has been treated as the important factors to economic growth.The purpose of this study is to evaluate the long run and short run relationship among these variables. Also, this study is aimed to analyze the causal relationship among these variables. This study employed real GDP per capita, ratio of total government expenditure in GDP, inflation rate and trade openness index for over a period of 47 years from 1970 to 2016 using time series analysis. The findings shows that all the independent variables namely government expenditure, inflation and trade openness have positive relationship with the dependent variable economic growth. Besides, the result of this study also suggested that government expenditure, inflation and trade openness are very important to Malaysia’s economic growth and government should emphasizes on these variables to design a more targeted policy.