RETHINKING THAILAND’S GROWTH POLICIES
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This paper applies Johansen’s cointegration and error-correction model to examine the relationships among a set of economic reform policies, the contribution of external factors, and Thailand’s economic growth. The Johansen’s cointegration results reveal that fiscal reform, openness, and deregulation have a positive effect on economic growth, while financial development has no significant effect on economic growth. Meanwhile, we also find that some external shocks have a highly significant effect, with a large magnitude, on Thailand’s economic growth. Additionally, the estimation of the VECM indicates that the variables in the model may be in disequilibrium in the short run since the short-run adjustment coefficient is significantly negative.
Abstract
This paper applies Johansen’s cointegration and error-correction model to examine the relationships among a set of economic reform policies, the contribution of external factors, and Thailand’s economic growth. The Johansen’s cointegration results reveal that fiscal reform, openness, and deregulation have a positive effect on economic growth, while financial development has no significant effect on economic growth. Meanwhile, we also find that some external shocks have a highly significant effect, with a large magnitude, on Thailand’s economic growth. Additionally, the estimation of the VECM indicates that the variables in the model may be in disequilibrium in the short run since the short-run adjustment coefficient is significantly negative.
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