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The Nexus between Fiscal Deficits and Economic Growth in ASEAN
- Journal of Southeast Asian Economies (JSEAE)
- ISEAS–Yusof Ishak Institute
- Volume 36, Number 1, April 2019
- pp. 25-36
- Article
- Additional Information
Abstract:
This study provides new evidence on the nexus between fiscal deficits and economic growth among ASEAN countries in the pre- and post-Global Financial Crisis (GFC) periods. Using annual data from 2001 to 2015, three results stand out. First, fiscal deficits are found to be growth-deteriorating in the pre-Crisis period and growth-enhancing in the post-Crisis period. Second, the impact of fiscal deficits on growth in pre- and post-GFC are robust to different measures of economic growth. Third, among control variables, inflation is important in influencing economic growth in the pre-Crisis period while exchange rate and inflow of foreign direct investment have a positive impact on growth in the post-Crisis period.