The Development of Growth Model with the Implication of Crisis Regime

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.