RSUSSH 2020

IN20-253 Effectiveness of Monetary and Fiscal Policies: Empirical Investigation for the Case of Thailand

Presenter: Wanakiti Wanasilp
Rangsit University, Thailand

Abstract

       In this research work, we attempted to examine the effectiveness of monetary and fiscal policies on the real output of Thailand. Related quarterly data were collected, covering the period from 2005: Q1 to 2018: Q4. The ARDL (Auto-Regressive Distributed Lags) model was employed to find a long-run equilibrium relationship and short-run dynamics between policy variables and real output. The estimation results can be summarized as follow: 1) There exists a long-run equilibrium relationship between government spending, policy interest rate and real output. 2) The short-run adjustment under the Error Correction framework shows that the coefficient of the error correction term is – 0.1559. This means that, after the system gets hit by an external shock, it will revert to its long-run equilibrium path in subsequent periods at the rate of 15.59% of the size of the initial deviation. 3) In terms of the effectiveness of the policies on real output, it is found that, in the long-run, the only policy interest rate has a negative effect on real output growth. In the short-run, per contra, both government spending and policy interest rate have an impact on changes in real output with delay by 2-4 lags. From these results, it is suggested that both monetary and fiscal policies be pursued in order to stabilize the economy in the short run.  

Keywords: Monetary policy; Fiscal policy; Stabilization; ARDL model; Error Correction model; Error Correction model

Citation format:

Wanasilp, W.. (2020). Effectiveness of Monetary and Fiscal Policies: Empirical Investigation for the Case of Thailand. Proceeding in RSU International Research Conference, May 1, 2020. Pathum Thani, Thailand.

QUESTIONS & ANSWERS

Yidan Zhang (Participant)

Thank you for your presentation, from your presentation, I didn't see your research motivation and the  rationale of your work, so my question is: what's your research motivation and rationale?

Wanakiti Wanasilp (Presenter)

Clear methodology and how it makes a recommendation in term of the policy from this research?

 

Wanakiti Wanasilp (Presenter)

Thank you for your question. My answers are as follow:

The rationale for the this research work is to find whether the moneatary and fiscal policies are effective in causing the impact on the real output, that is, to stabilize the national GDP. For if any p-olicy is not effective, then there is no point to spend our our resources (taxpayers' money) to conduct such policy in the first place. 

The motivation for doing this research is to use the actual data to support the uses of monetary and fiscal policies for stabilization purpose. 

The results from the finding in this paper turn out to support the uses of these stabilization policies, i.e., policy interest rate and government spending have an impact on real output.