The effectiveness of monetary and fiscal policy toward economic growth in Malaysia / Raznil Saili

This research paper focusing on the effectiveness of monetary and fiscal policy toward economic growth in Malaysia. This paper was done with the objective of finding out the relationship between monetary, fiscal policy and economic growth. Also finding out the effectiveness monetary and fiscal policy toward economic growth in Malaysia. This research using time series data (from 1977-2012) were sourced from World Bank Data. For Monetary policy this paper are using data of money and quasi money (M2) and for Fiscal Policy this paper use data of general government final consumption expenditure and the for economic growth are GDP constant LCU. The data were analyze using Ordinary Least Square (OLS). Based on the finding there is a positive relationship between money supply, government spending and economic growth. After that, the effect of monetary is stronger than fiscal policy toward economic growth. Even though monetary policy is more effective than fiscal policy. The Government should imply the suitable policies based on specific economic situation. In addition the combination between this two, monetary and fiscal policy is highly recommended for the economic growth.