Abstract
This conceptual paper aims to develop the theory of growth proposed by Keynes by considering crises or events that occur as well as incorporating interaction variables into the model to be studied simultaneously. Studies related to growth theory have been conducted before. However, previous studies have ignored crises or important events that affect economic growth. Although the Keynesian theory has been used to achieve the objectives of the study, past studies have proven that Wagner's Law may exist in some situations. Therefore, the opinions of these two economic figures related to the theory of government expenditure and economic growth should be given attention. The main objective of this conceptual paper was to assess the relationship between interactional variables and dummy variables of structural change in three regimes or different crises occurring simultaneously and the effects on economic growth in Malaysia for the long-term and short-term periods. The Autoregressive Distributed Lag (ARDL) method will be used to ascertain long-term and short-term relationships between endogenous and exogenous variables. Then, the results from previous studies are included in the findings section of the study.
Highlights
Malaysia has experienced economic crises or structural changes that resulted from external factors such as the open economic policy is practiced
The findings indicated that there was a two-way relationship between economic growth for longterm and short-term periods using the Vector Error Correction Model (VECM)
The findings revealed long-term and shortterm bidirectional causality between interaction variables and economic growth
Summary
Malaysia has experienced economic crises or structural changes that resulted from external factors such as the open economic policy is practiced. 2020/21 Global Health Crisis has affected the economic growth of Malaysia and other nations around the world. The implementation of an expansionary fiscal policy can both restore and increase the country's GDP. This has been proven when the country faced the Asian Financial Crisis and the Global Financial Crisis (Kaharudin et al, 2017). John Maynard Keynes was an economist who put forward the Keynesian theory regarding the law of demand and supply. Came Adolph Wagner, who introduced Wagner's Law. Keynes has clearly presented an equation for looking at the relationship between dependent and independent variables
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