Public Debt and Economic Growth in Malaysia

Abstract

Public debt in the Malaysia increased because of fiscal expansions. This study examines whether public debt contributed to the economic growth in Malaysia over the period 1991 to 2013. It also examines whether other indicators of debt burden, such as budget deficit, budget expenditure, and external debt service and government consumption, have an impact on economic growth. The results of this study are consistent with the existing literature that found a negative association between diet and growth. The results indicate that public debt over time has a negative impact on GDP. In addition, it is found that the budget deficit, government consumption and external debt service are a decreasing function of GDP.