Open Access
Article
SciPap-2110
Is Impact of Government Size on Growth in ASEAN Linear or Non-linear? Monte-Carlo Hierarchical Insights under Keynesian, Neoclassical, and Barro Perspectives
by
Thach Nguyen Ngoc 1,* 
1 Asian Journal of Economíc and Banking, HoChiMinh University of Banking, 39 Ham Nghi District 1 HCMC, Vietnam, Ho Chi Minh 700000, Viet Nam
* Authors to whom correspondence should be addressed.
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.
Keywords: Monte Carlo Algorithm, Bayesian Hierarchical Approach, Multicollineartity, Reverse Causality, Government-Growth, Negative Linear Effect, Asean
JEL classification: E62 - Fiscal Policy, O40 - General
Received: 20 October 2024 / Revised: 16 November 2024 / Accepted: 21 November 2024 / Published: 29 November 2024
