Macroeconomics and Monetary Economics

Siti Marsila Mhd Ruslan · Kasypi Mokhtar ·Jurnal Ekonomi Malaysia ·2020

This study examines the price differences between Peninsular Malaysia and Sabah from 2004 using quantitative and qualitative methods. For quantitative research, we employ disaggregate monthly consumer price indices for nine types of goods and services. Based on the Johansen co-integration test, the results reveal that the long-run relationship only exists for transport group. The findings using Granger pair-wise causality test indicated that the prices in Peninsular Malaysia do not determined the price in Sabah. Qualitative research was further conducted via interviews with stakeholders of shipping providers, port authority, government and special interest group show that the price disparity between Peninsular Malaysia and Sabah occurred due to trade imbalance, sluggish economic activities, poor accessibility between port and retailers, insufficient infrastructure and technical facilities and political sentiment.

Muhamad Rias K V Zainuddin · Md Shafiin Shukor · Muhamad Solehuddin Zulkifli · Amirul Hamza Abdullah ·Jurnal Ekonomi Malaysia ·2021 ·JEL: F10, F14

The recent pandemic outbreak has distorted international trade flows as the global economic activity reaches a nearstandstill due to stricter movement control imposed by most countries worldwide. Despite gaining the researcher’s attention, the impact of Covid-19 on trade performances are still relatively understudied. Hence, this study aims to analyse the impact of the Covid-19 pandemic outbreak on the bilateral sectoral export for Malaysia. This study employs Poisson Pseudo Maximum Likelihood (PPML) regressions to analyse the sectoral impact in gravity models. The findings provide new perspectives on the varying impacts of the current pandemic outbreak on sectoral trade performances. The dummy variables that represent the existence of Covid-19 have significantly reduced bilateral exports for 11 sectors while increased the exports for seven sectors. Meanwhile, the severity of the Covid-19 outbreak (measured by the number of new cases and death cases) in Malaysia has negative impacts on 14 sectors. The reason for this is that when the current pandemic outbreak in Malaysia is more severe, the government has to enforce stricter movement controls that affect productions and reduce exports. On the other hand, the severity of the Covid-19 outbreak in trading partners has positive impacts on the export for 13 sectors in Malaysia. This is because the more severe pandemic outbreak in trading nations causes lower production capacities and thus higher dependence on imported goods. Differences between the impact of Covid-19 existence and severity by sectors should serve as a red flag for Malaysia’s policymakers to take immediate actions to minimise the impact of the ongoing pandemic outbreak and maximise gains from sectors that have higher demand post Covid-19. The net negative impact on the export performance further reiterates the need for government intervention policies to ensure domestic firms can withstand the current tide, which then minimises the social and economic impacts and helps the economy to recover.

Ke-Chyn Ng · Mui-Yin Chin ·International Journal of Economics and Management ·2021 ·JEL: F14, F31

This study examined the impact of exchange rate fluctuations on the level of international trade between Malaysia and China using 45 observations spanning from 2010 quarter 1 to 2021 quarter 1. The Generalized Autoregressive Conditional Heteroscedasticity (GARCH) model was adopted to compute the exchange rate fluctuations. International trade between Malaysia and China was selected in this study as, since 2009, China has consistently been Malaysia's top trading partner. Besides, to produce precise output, this study employed two models: the export and import models. The empirical results, derived from Autoregressive Distributed Lag (ARDL) modelling, suggested that exchange rate fluctuations had a negative but statistically insignificant impact on exports. In contrast, exchange rate fluctuations had a positive and statistically significant impact on imports. This result implied that importers from Malaysia were generally risk-takers, as they tended to trade significantly during periods of high exchange rate fluctuation. However, to avoid losses for both exporters and importers due to exchange rate fluctuations, policymakers from both countries should ensure that facilities for exchange rate hedging become more convenient and straightforward for traders so that international trade continues to bloom for both countries.

Evan Lau · Alvina Lee Syn-Yee ·Jurnal Ekonomi Malaysia ·2018

As with most of the world economy, the 2008/09 global financial crisis has brought massive impacts on Southeast Asian economies. The debt/GDP ratios in most economies rose significantly, thus putting the spotlight again on fiscal sustainability. This article aims to distinguish the reaction of the primary balance/GDP to changes in the debt/GDP to assess the fiscal sustainability of Malaysia, Thailand, and the Philippines. In investigating how the respective governments react to the accumulation of debt, the article estimates the fiscal reaction function, initiated by Bohn (1998), using Ordinary Least Square (OLS) and Vector Autoregression (VAR). The empirical analysis reveals that, based on past behaviour, fiscal policy in Malaysia, Thailand, and the Philippines remains sustainable.

Y. Amjad · N.A.M Naseem · W.N.W. Azman-Saini · Tajul Ariffin Masron · K. Kriskkumar ·Jurnal Ekonomi Malaysia ·2018

Export has been considered as main contributor to economic growth in which also known as export-led growth (ELG) hypothesis. The purpose of this study is to identify the export-led growth nexus in Malaysia. Specifically, this study focuses on disaggregated level of exports such as export of goods and manufactured sectors. By using ARDL co-integration technique for data that covers from 1980 to 2015, the result discovers that exports have positive impact on economic growth, particularly at disaggregated levels of exports namely exports of goods and export of manufactured sectors. This further supports the validation of the export-led growth hypothesis, especially in small, open and dynamic economy like Malaysia. From policy point of view, Malaysia policy makers should give special focus to search for better catalyst of exports promotion strategy to continuously and effectively promote long-term economic growth.

May Jin Theong · Ahmad Farid Osman · Su Fei Yap ·Institutions and Economies ·2018 ·JEL: E20; E32; E37; E44; E51; G21

Malaysia has one of the highest household debts relative to gross domestic product in the Asia region. High indebted households have negative net worth and prone to default even during mild shocks. In most economies including Malaysia, household loan default is dominated by mortgages. In Malaysia, however, credit card debt default rate has been growing faster than mortgage default rate. Thus, this paper analyses how combined global and domestic macroeconomic factors impact on credit card nonperforming loan (NPLs) in Malaysia. Estimates from the Autoregressive Distributed Lags (ARDL) model highlights that in the long run, credit card NPLs are procyclical as strong domestic real output reduces credit card default. The study shows positive global crude oil price shocks reduces the credit card NPLs while a stressed global financial market condition has a reverse effect on credit card NPLs. Further, consumer price index negatively relates to credit card NPLs while monetary policy affects NPLs whereby a cut back of the overnight policy rate reduces credit card debt default.

Nur Syazwani Mazlan · Farah Yushanis Fadzilah · Saifuzzaman Ibrahim ·Jurnal Ekonomi Malaysia ·2019

This paper examines the impact of globalisation on the level of human development in Malaysia. It also investigates the roles of other potential determinants of human development such as foreign direct investment (FDI), trade openness and international migration on Human Development Index (HDI) in Malaysia. We employ the method of Autoregressive Distributed Lag (ARDL) on the annual time series data covering the period from 1980 to 2017. The results confrm a positive and signifcant long run relationship between globalisation and FDI with HDI in Malaysia. However, the results imply a negative short and long run relationship of both trade openness and international migration with HDI. Therefore, the results suggest for policies to be focused and geared towards fostering globalisation and attracting the infows of FDI if the country’s main agenda is to improve the level of human development.

Chee-Hong Law ·Applied Economics Letters ·2018 ·JEL: F21; F31; F40

Some observations have suggested that international reserves contribute to trilemma policy convergence in emerging countries. Nonetheless, this hypothesis needs more solid empirical evidence to determine its validity. This article tests this hypothesis by examining the relationships among the index of policy dispersion, international reserves and trade openness in a threshold model in Malaysia. As a small open economy, Malaysia has accumulated a relatively large amount of international reserves since the mid-1990s. The results indicate that the positive impact of international reserves on reducing policy dispersion or achieving policy convergence is found only if the international reserves are above a threshold. Hence, this conclusion supports the need to hold a relatively high level of international reserves in Malaysia.

Basem Ertim · Tamat Sarmidi · Norlin Khalid · Mohd Helmi Ali ·Asian Economics Letters ·2022

In an attempt to mitigate the effects of COVID-19, the Malaysian government imposed the Movement Control Order (MCO). To address the adverse impacts of the MCO policy, the Malaysian government initiated a series of recovery plans for both fiscal and monetary measures. This study aims to assess the government’s various policy measures on Malaysia’s leading macroeconomic indicators. Regardless of the differences in the gross domestic product (GDP) components, the real impacts on GDP growth are almost identical between Malaysia and a control group. This result is partly explained by the increase in total and domestic investment and private consumption.