The economic performance of Malaysia was affected by a series of financial crises that had induced macroeconomic instability in the country, which in turn had immensely dampened the nation's economic growth rate. No doubt Malaysia needs an indicator to monitor the nation's economic performance from time to time. This study attempts to construct such indicator known as Macroeconomic Instability Index (MII). The constructed MII shows two significant spikes at 1998 and 2008, which correspond to the Asian Financial Crisis and US Subprime Mortgage respectively, that had resulted in negative growth rate for GDP of Malaysia in 1999 and 2010. Results obtained from further analysis by the ARDL technique show that MII has negative and significance effects on economic performance. Moreover, MII has predictive power against economic performance as early as two periods in advance. The constructed MII could serve as end-product for policy purposes or intermediate-product for other economic and finance studies.
Widening income inequality in recent years has triggered an outpouring analysis and reflection on the causes of inequality. Economic cooperation demonstrated robust economic growth, reducing poverty but also accompanied by rising inequality. The income gap persists between ASEAN-5 (Indonesia, Malaysia, the Philippines, Singapore, Thailand) and the ASEAN-3 (Cambodia, Laos, Vietnam) has become a prominent issue and policy debate. Hence, this study aims to investigate the relationship of regional economic integration and income inequality by adopting a balanced panel analysis for selected ASEAN countries from 2005 to 2018. Trade and financial integration was evaluated to investigate the influence on inequality. Empirical findings showed that trade integration is more effective than financial integration in improving income distribution. Export activities from the manufacturing and service sectors help ASEAN-5, while the agricultural and manufacturing sectors help ASEAN-3 in narrowing income distribution. Therefore, integration policies to improve inequality should not be universally implied on countries with diverse economics structures and varied development activities.
This paper examined the nexus between corruption and economic growth of the Association of Southeast Asian Nations (ASEAN) countries covering the period from 1996 to 2018. Most of the ASEAN countries experiencing high level of corruption associated with robust economic growth performance. This phenomenon is opposite against the prevalent proposition of negative linkage between corruption and economic growth. Therefore, a non-linearity analysis has been incorporated to cover the changes in the effect of corruption on economic growth. This finding revealed there is a significant U-shaped relationship between control of corruption and economic growth of ASEAN countries. In other words, corruption may indirectly facilitate the growth until certain threshold level, ultimately, corruption is substantially reducing growth as corruption level under control. Empirical results indicate that the threshold level of corruption is approximately 1.84 on a 5-point scale of corruption control. This shows that corruption will be detrimental to growth when the corruption level is beyond the threshold level. The speed of adjustment implies that ASEAN countries was vulnerable to the variations as it takes longer time to adjust to long-run equilibrium, particularly on economic growth, trade openness, and inflation. The granger causality test denotes the causality between control of corruption and other variables are mutually complementary.
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