Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications

The relationship between major economic variables provides important information in strategizing macroeconomic stabilization policy for an economy. In this study, we focus on the relationship between output and price and draw important policy implications for macroeconomic stabilization policy in Ma...

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Main Authors:	Kassim, Salina, Abdul Manap, Turkhan Ali
Format:	Conference or Workshop Item
Language:	English
Published:	2010
Subjects:	H Social Sciences (General) HA Statistics HB3711 Business cycles. Economic fluctuations
Online Access:	http://irep.iium.edu.my/12207/ http://irep.iium.edu.my/12207/1/Output_Price_Comovement_Malaysia.pdf

id	iium-12207
recordtype	eprints
spelling	iium-122072013-03-22T08:27:16Z http://irep.iium.edu.my/12207/ Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications Kassim, Salina Abdul Manap, Turkhan Ali H Social Sciences (General) HA Statistics HB3711 Business cycles. Economic fluctuations The relationship between major economic variables provides important information in strategizing macroeconomic stabilization policy for an economy. In this study, we focus on the relationship between output and price and draw important policy implications for macroeconomic stabilization policy in Malaysia. The nature of output-price relationship provides the information about the dominant component that drives the economy’s business cycles. An economy that is characterized by a positive relation between output and price suggests the dominance of the demand shocks in influencing the macroeconomic fluctuations. In contrast, an economy where output varies negatively with price indicates the dominance of supply shocks, suggesting that the production side of the economy is influencing the economic cycles. This study conducts a comprehensive analysis of the output-price relationship in Malaysia with the objective of drawing relevant policy recommendations for effective macroeconomic stabilization policy. We analyze the short- and long-run co-movements between real activity and prices using several tests in efforts to arrive at conclusive findings. Apart from the descriptive analysis, the study relies on the VAR forecast errors based on Den Haan and Sumner (2000). The study considers an extended data sample of monthly frequency covering the period from January 1971 to November 2009. By identifying the major source of macroeconomic fluctuations in Malaysia, the study aims to contribute towards enriching policy recommendations for effective macroeconomic stabilization policy in the country. 2010 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/12207/1/Output_Price_Comovement_Malaysia.pdf Kassim, Salina and Abdul Manap, Turkhan Ali (2010) Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications. In: Terengganu International Business and Economics Conference 2010 (TiBÉC II), 5th-7th August 2010, Terengganu. (Unpublished)
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	H Social Sciences (General) HA Statistics HB3711 Business cycles. Economic fluctuations
spellingShingle	H Social Sciences (General) HA Statistics HB3711 Business cycles. Economic fluctuations Kassim, Salina Abdul Manap, Turkhan Ali Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications
description	The relationship between major economic variables provides important information in strategizing macroeconomic stabilization policy for an economy. In this study, we focus on the relationship between output and price and draw important policy implications for macroeconomic stabilization policy in Malaysia. The nature of output-price relationship provides the information about the dominant component that drives the economy’s business cycles. An economy that is characterized by a positive relation between output and price suggests the dominance of the demand shocks in influencing the macroeconomic fluctuations. In contrast, an economy where output varies negatively with price indicates the dominance of supply shocks, suggesting that the production side of the economy is influencing the economic cycles. This study conducts a comprehensive analysis of the output-price relationship in Malaysia with the objective of drawing relevant policy recommendations for effective macroeconomic stabilization policy. We analyze the short- and long-run co-movements between real activity and prices using several tests in efforts to arrive at conclusive findings. Apart from the descriptive analysis, the study relies on the VAR forecast errors based on Den Haan and Sumner (2000). The study considers an extended data sample of monthly frequency covering the period from January 1971 to November 2009. By identifying the major source of macroeconomic fluctuations in Malaysia, the study aims to contribute towards enriching policy recommendations for effective macroeconomic stabilization policy in the country.
format	Conference or Workshop Item
author	Kassim, Salina Abdul Manap, Turkhan Ali
author_facet	Kassim, Salina Abdul Manap, Turkhan Ali
author_sort	Kassim, Salina
title	Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications
title_short	Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications
title_full	Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications
title_fullStr	Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications
title_full_unstemmed	Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications
title_sort	co-movement of output and price in malaysia: empirical evidence and macroeconomic policy implications
publishDate	2010
url	http://irep.iium.edu.my/12207/ http://irep.iium.edu.my/12207/1/Output_Price_Comovement_Malaysia.pdf
first_indexed	2023-09-18T20:21:26Z
last_indexed	2023-09-18T20:21:26Z
_version_	1777408133698682880

Co-movement of output and price in Malaysia: empirical evidence and macroeconomic policy implications

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