The Impact Of Government Sectoral Expenditure On Malaysia’s Economic Growth

1. Malaysia The Impact Of Government Sectoral Expenditure On Malaysia’s Economic Growth Presenter : AIMI AJLAA BINTI SALIMI

2. CONTENTS

3. INTRODUCTION Malaysia’s Overview: • After independence in 1957, economic growth of Malaysia was increased due to the increased on government expenditure on health, education, communication and other public sectors. • During the financial crisis in 1997 until 1999, the current account is deficit over 6% of gross domestic product (GDP). In 2008, the crisis again occurred which impact to the Malaysian economy performed decrease on GDP growth rate of 4.6%. • In 2009 until 2012, economy of Malaysia has been recovered and expected to record positive growth rate.

4. INTRODUCTION Background of the study: • The Malaysia’s economy have impact on two types of government expenditure which includes government development expenditure and government operating expenditure. • From these two types of government expenditure has performed the total government expenditure. • The government expenditure includes security, social services, economic services and general administration. These study focuses on economic services : health and education expenditure that will impact to economic growth

5. INTRODUCTION

6. INTRODUCTION

7. LITERATURE REVIEW

8. LITERATURE REVIEW

9. METHODOLOGY

10. METHODOLOGY • Steps on gathering the results:1) Stationarity Test (Unit Root Test) by using Augmented Dickey-Fuller (ADF) test and Philips Perron (PP) test 2) Autoregressive Distributed Lags (ARDL) test: a) F-statistic test b) Long Run Cointegration c) Short Run Cointegration 3) Diagnostic Test: a) Jarque-Bera Normality test b) Lagrange Multiplier (LM) serial correlation test c) Autoregressive Conditional Heteroscedasticity (ARCH) test d) Ramsey RESET functional form tests (Error test) e) CUSUM and CUSUM-squared test

11. RESULT AND DISCUSSION To test the unit root most widely used test is Augmented Dickey-Fuller (ADF) test and Philips-Perron (PP) S T A T I O N A R I T Y

12. ADF test and PP test Notes: Significant Level: *** 1% ; **5% ; *10%

13. RESULT AND DISCUSSION • ARDL cointegration test: To perform ARDL cointegration test, the model should be transformed into unrestricted error correction model (UECM) Autoregressive Distributed Lags (ARDL) test A R D L APPROACH Cointegration test

14. RESULT AND DISCUSSION F-test4.5442F-test > Critical Values H0 : 1 = 2 = 3 = 4 = 5 = 0 (no cointegration) H1 : 1 ≠ 2 ≠ 3 ≠ 4 ≠ 5 ≠ 0 (cointegration) A Reject the H0 R D Critical Values for ARDL Cointegration Test, Narayan (2005) L Critical Values ( k = 4 , n = 40) APPROACH 10% Significant level

15. RESULT AND DISCUSSION Long Run Cointegration A R D L APPROACH Notes: Significant Level: *** 1% ; **5% ; *10%

16. RESULT AND DISCUSSION Short Run Cointegration A R D L APPROACH Notes: Significant Level: *** 1% ; **5% ; *10%

17. DIAGNOSTIC TESTS RESULT AND DISCUSSION

18. RESULT AND DISCUSSION *CUSUM and CUSUM-squared in order to test for constancy of long-run parametersBrown et al. (1975) *Result:Both stay within the critical bounds as the estimated parameters are stable over the analysis period

19. CONCLUSION

20. THANK YOU Malaysia q&a Presenter : AIMI AJLAA BINTI SALIMI