Is Impact of Government Size on Growth in ASEAN Linear or Non-linear? Monte-Carlo Hierarchical Insights under Keynesian, Neoclassical, and Barro Perspectives
Year: 2024
Type: article
Abstract: Many prior studies on the government-growth nexus have focused on Keynesian (Keynes, 1936) or neoclassical (Lucas, 1990) traditions, while a recent research strand has paid widespread attention to Barro (1990)’s non-linear perspective. Although modern complexity sciences suggest an overall non-linear trend in a complicated, interconnected, globalized world, non-monotonicity is poorly addressed in the applied literature. This work explores both the linear and non-linear effects of government size on economic growth. By employing a hybrid Metropolis-Hastings algorithm within a hierarchical Bayesian approach to a panel of ASEAN countries over 1950-2019, which aids in handling statistical complexities, the results show a negative growth impact of government size. This finding aligns with the neoclassical viewpoint on bureaucratic inefficiencies and the distortionary effects of government intervention in a market economy. Substantial measures are needed to increase public spending efficiency and accountability, focus on productive investments, encourage private sector activities, and implement structural reforms in ASEAN.
DOI: 10.46585/sp32032110
Author: Thach Nguyen Ngoc
Institution: Ho Chi Minh University of Banking
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $215
OpenAlex ID: W4404850489