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Jurnal Ekonomi dan Studi Pembangunan

Abstract

This study analyzes the moderating role of investment in the relationship between fiscal policy and economic growth across 32 Asian countries during the period 2005-2022. Using balanced panel data and a fixed-effects regression model, this study includes an interaction term between government spending and gross capital formation and controls for inflation, population growth, and trade openness. The results show a statistically significant positive interaction between government spending and investment, reflecting a complementary crowding-in effect on economic growth. Investment itself has a positive effect on growth, while government spending, when considered separately, has a negative correlation. The moderating effect is conditional, underscoring the importance of coherent policy design. Grounded in both endogenous growth theory and the Keynesian fiscal framework, this study demonstrates that the fiscal-investment nexus operates through a conditional mechanism: government expenditure amplifies private investment returns only when directed toward productive sectors. This study provides new empirical evidence regarding the moderating role of investment in the relationship between fiscal policy and growth, an aspect often overlooked in previous studies. Policy implications emphasize the need to direct public spending toward productive sectors to create synergies with private investment, thereby fostering sustainable and resilient growth in the evolving Asian landscape.

First Page

30

Last Page

49

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