Fiscal Policy, Institutions and Economic Growth In Asian Economies

This study determines the long run relationship between government expenditure, fiscal policy and economic growth, the role of institutions on economic growth, and whether institutions require complimentary factors to influence economic growth through an interaction term effects between government expenditure and institutions, and fiscal policy and institutions on economic growth of thirteen Asian economies. It is particularly important because economic growth has declined and become stagnant significantly and government expenditure does not inhibit the full exploitation of the growth potential of Asian economies. There is also a broad consensus that the developments in fiscal policies contribute to the relatively weak growth performance. Weak fiscal positions have left little room for further fiscal expansion in most Asian economies when faced by economic slowdown. Generally efficiency of the role of institutions is sadly lacking, and there are numerous deficiencies in the functioning of role of institutions in Asian countries.