I was reading the Business Times and I saw this:
In 2007, Malaysia’s GDP is estimated to grow at more than 5.0 per cent. The two key drivers of demand will be higher government spending and an increase in private investments, particularly with the implementation of the 9th Malaysia Plan.
Quiz for students of macroeconomics: with ceteris paribus, what will happen to private investment when the government increases its spending?
Answer: See crowding out at Wikipedia.
Nearly four months ago, the Malaysian Domestic Trade and Consumer Affairs Minister announced that his ministry planned to combat shortage with — drum roll please — price ceiling!
3 replies on “[1041] Of Malaysian government spending and private investment in 2007”
[…] is to the Malaysian economy, I expect a dent though government spending via the Ninth Malaysia Plan might take up the slack. Keynesians would love that […]
[…] crisis affect trade between Malaysia and the US adversely. The effect however is being mitigated by large government spending and as mentioned earlier by Bank Negara, robust domestic consumption and investment. While I […]
[…] the look of it, that many of the planned huge government expenditure are not going to happen any time soon. Where are these Keynesians now, I […]