Tác động bất cân xứng của nợ công đến tăng trưởng kinh tế bằng chứng thực nghiệm từ việt nam

MINISTRY OF EDUCATION AND TRAINING THE STATE BANK OF VIETNAM HOCHIMINH UNIVERSITY OF BANKING NGUYEN XUAN DUNG ASYMMETRIC IMPACT OF PUBLIC DEBT ON ECONOMIC GROWTH - EMPIRICAL EVIDENCE FROM VIETNAM DOCTORAL DISSERTATION SUMMARY Major: Finance - Banking CODE: 9.34.02.01 PhD Supervisor: Assoc Prof., Dr.Nguyen Duc Trung HO CHI MINH CITY - 2023 CHAPTER 1: INTRODUCTION OF RESEARCH 1.1 THE RATIONALE OF RESEARCH The global financial crisis has generated increased interest in comprehending the complex interplay between fiscal policies and economic growth cycles, with a particular focus on the medium-term perspective In this particular environment, the interaction between fiscal and monetary policy plays a crucial role in determining the direction of economic growth Governments use a range of policies, which may be classified as either pro-cyclical or counter-cyclical, as instruments to address economic contractions and booms Developed countries often use countercyclical techniques, including systems such as automatic stabilizers On the other hand, developing nations such as Vietnam often use procyclical macroeconomic policies as a means to narrow disparities with more developed economies and stimulate economic expansion In light of these prevailing circumstances, the present study examines the asymmetric impacts of public debt on the economic progress of Vietnam, taking into account the unique characteristics of its state-controlled economic structure Developed nations tend to emphasize countercyclical fiscal tactics, but Vietnam and other developing countries tend to tilt towards procyclical measures The main aim of this study is to provide empirical evidence on the impact of public debt on Vietnam's long-term economic growth and sustainability The purpose of this inquiry is to contribute to the existing academic discourse by examining the complex nature of government financing via debt and its extensive consequences for both short-term and long-term economic development The research places major emphasis on the background of Vietnam's economic system, specifically highlighting the notable level of government engagement in economic operations In contrast to other investigations primarily focused on defining debt thresholds, the present study endeavors to completely examine the multifaceted positive and negative consequences connected with debt Through a thorough examination of the functions of government borrowing and its effects on both short- term sustainability and long-term prospects, this study provides empirical evidence for the continuing academic discussion over public indebtedness and its complex relationship with economic advancement Within the wider framework of global economies during a crisis, the complex relationship between public debt and economic progress gains more significance Developed nations often use countercyclical fiscal methods as a means to alleviate economic volatility However, Vietnam's distinctive state-managed economic framework necessitates a particular examination The objective of this study is to provide a comprehensive understanding of the varied effects of public debt on Vietnam's developmental path The aim is to improve our understanding of the dynamics of public debt in order to promote sustainable economic growth 1.2 RESEARCH OBJECTIVES The purpose of this study is to quantify the asymmetric impact of Vietnam's governmental debt on economic growth The conclusions of the asymmetric impact of public debt on economic growth serve as the foundation for recommending fiscal policies for Vietnam To accomplish the objective, the research must address the following specific aims: (1) Assessing the impact of fiscal policy determinants on economic growth in Vietnam (2) Examining the asymmetric impact of public debt on economic growth in Vietnam (3) Analyzing the effects and repercussions of the policy of public debt on the expansion of the Vietnamese economy 1.3 OBJECTS, SCOPE AND METHODOLOGY OF THE RESEARCH Research subjects include economic growth and public debt After examining the relationship between fiscal policy, as represented by total tax income, government debt, and government spending, and the business cycle, as exemplified by economic growth, The scope of the study is the public debt and economic growth of Vietnam in the period from the first quarter of 2000 to the first quarter of 2021 Research data: quarterly data for the period from Q1 2000 to Q1 2021 are obtained from IMF financial statistics (IFS) Vietnam's national product (GDP), expansionary money supply (BM) growth, and lending rate (IRO) as a percentage; Public debt; USD/VND exchange rate; and government spending are trend variables without a normal distribution; hence, the deviation must be quite large Therefore, those variables need to be converted to logarithmic base natural form and simultaneously calculated by dividing the year's exchange rate by the base year rate (the exchange rate for the first quarter of 2000) After using the VECM model to test and estimate the relationship between fiscal policy and the business cycle of Vietnam, The research methods utilized are quantitative NARDL used an asymmetric regression model to examine the disproportionate effect of public debt on economic growth in Vietnam On this premise, the thesis makes proposals for the development of policies concerning Vietnam's national debt 1.4 THE SIGNIFICANE AND CONTRIBUTIONS OF THE RESEARCH This research endeavor addresses a notable void in the existing literature by using theoretical analysis and empirical inquiry, providing fresh perspectives on the correlation between public debt and economic development The theoretical significance of this work rests in its use of fundamental ideas pertaining to public debt and economic development, specifically applied to the peculiar setting of Vietnam Vietnam's economy is now experiencing a transition towards market procedures and is defined by unique components The research sample includes a range of countries, including both industrialized and developing nations Vietnam is used as a case study to examine the relevance of theoretical frameworks in economies with distinct characteristics This inquiry illuminates the congruence of theoretical prognostications, empirical discoveries, and the actualities of Vietnam's economic terrain This study diverges from the predominant qualitative analysis used in domestic research and the linear or threshold models often used in foreign studies in terms of its empirical research and practical importance In contrast, the paper presents a novel framework that examines the asymmetric effects of public debt on economic development and is specifically designed to account for the unique complexities of Vietnam's dynamic and internationally interconnected economic landscape Additionally, this study makes a valuable contribution to the existing corpus of empirical research by examining two critical factors This study examines the consequences of the public debt-to-GDP ratio threshold on economic development in emerging and transitional countries, with a specific focus on Vietnam This field of research has received little attention so far Furthermore, this study reveals the asymmetric impact of Vietnam's public debt on economic development, providing detailed insights into the intricate nature of this association 1.5 RESEARCH CONTENTS Chapter 1: Introduction of The research Chapter 2: Theories and Literature Review Chapter 3: Research Methodology Chapter 4:Research results and Discussion Chapter 5: Conclusions and Policy Implications CHAPTER 2: THEORIES AND LITERATURE REVIEW 2.1 THEORIES OF FISCAL POLICY AND BUSINESS CYCLE 2.1.1 Concepts relevant to the research problems - Fiscal Policy and Business Cycle Within the broader context of macroeconomics, fiscal policy assumes a significant role, characterized by its complicated integration with ideas and perspectives put forward by notable researchers such as Keynes (1936), Furceri and Jalles (2016), Acemoglu et al (2013), Fatas and Mihov (2013), and Vegh and Talvi (2005) Fiscal policy has a significant effect on economic activity via the manipulation of government spending and taxes The importance of this initiative is underscored by its diverse objectives, which include resource mobilization, economic restructuring, sustainable development, market stability, and fair income distribution The present study is based on the fundamental principles of Keynesian economics and aims to elucidate the complex relationship between fiscal policy and the development of real GDP This examination delves into the fluctuating cycles of the economy Pro-cyclical tactics include the implementation of higher taxes and decreased government spending while facing deficits, which stands in contrast to the countercyclical approach The countercyclical strategy, on the other hand, is characterized by increased government expenditure and lower tax collections during periods of economic downturns Developed economies utilize automatic stabilizers and tax adjustments to effectively manage economic contractions, whereas emerging nations implement pro-cyclical measures to address developmental disparities It is important to acknowledge the significant interplay between fiscal policies, governmental functions, and the dynamic patterns of the business cycle 2.1.2 Theories of Fiscal Policy and Business Cycle The significant resonance between economic theories and policy approaches is seen in the context of fiscal policy's function in economic management, as elucidated by Keynesian theory and neoclassical perspectives The need for government involvement in stabilizing economies via countercyclical fiscal policies, as advocated by Keynesian principles, is emphasized in the works of prominent scholars such as Barro (1979), Fatás and Mihov (2009), and Chari et al (1994) These techniques try to manage economic instability by making adjustments to government spending and taxation Nevertheless, the implementation of these measures is constrained in developing countries as a result of insufficient social safety nets On the other hand, neoclassical viewpoints argue for the need to maintain tax stability during economic cycles However, these perspectives not adequately tackle the intricate issues related to resource allocation, distribution, and long-term stability The scholarly debate is further enriched by the comprehensive examination of fiscal policy dynamics, including tax reductions, government expenditure, budget deficits, and interest rates, as proposed by Thornton (2008) and Dinh Van Thong (2009) A modern integration combines these viewpoints under a mixed-economy framework in which the convergence of government intervention and market processes is aimed at maximizing efficiency, equality, and stability The endogenous growth model, as shown by Mankiw (2005) and Dinh Van Thong (2009), emphasizes the significant role of fiscal policy in addressing market imperfections and using sector-specific advantages to promote both short-term and long-term economic growth The convergence of Keynesian and neoclassical frameworks, together with the complex interaction between government intervention and market forces, influences the multifarious role of fiscal policy in maintaining economic development and stability In the context of global economic changes, a complex balance arises whereby short-term goals are weighed against the long-term sustainability of fiscal policy's direction 2.2 THEORETICAL OF PUBLIC DEBT AND ECONOMIC GROWTH 2.2.1 Theories of Public debt The funding of government operations through different sources of public revenue, such as taxes and penalties, faces challenges in contemporary governance due to fiscal deficits caused by various factors like infrastructure investments, economic downturns, and public sector expenditures In order to bridge these gaps, governments use public sector borrowing via the issuing of debt instruments, resulting in the establishment of public debt as a legally enforceable liability Governments make a commitment to repay their creditors, which includes both the principle amount borrowed and the interest accrued This commitment is made in accordance with specified repayment schedules, which are influenced by several factors, such as the need to finance infrastructure projects, respond to wartime demands, and meet developmental objectives During the period after World War II, there was a significant increase in debt accumulation as countries focused on revitalizing their economies This coincided with the establishment of international organizations like the International Monetary Fund (IMF) and the World Bank, which played a crucial role in shaping the dynamics of global borrowing The advent of globalization has had a dramatic impact on the global financial sector, resulting from increased capital mobility and intense financial competitiveness Developing countries deliberately use public debt as a means to attract short-term capital inflows, using various incentives such as tax reductions and reduced interest rates However, the absence of regulations on borrowing gives rise to inherent hazards that have the potential to initiate a dangerous cycle of accumulating foreign debt The presence of readily obtainable borrowed cash may potentially foster imprudent spending habits, compromising economic performance by diverting capital to inappropriate uses and burdening future generations with debt obligations The proficient administration and supervision of public debt assume critical importance in order to prevent unfavorable economic consequences and promote long-lasting sustainable development 2.2.2 Classical theories of public debt and economic growth According to Ricardo's classical economic paradigm, public debt has a significant impact on a nation's economic conduct that goes beyond mere financial transactions This phenomenon is shown by the possible facilitation of heightened fiscal expenditures by the government, motivated by the projected influence of debt on the economic outlook Conventional models emphasize the adverse consequences of government spending funded by debt, since it may not completely counterbalance the crowding-out impact on private investment, leading to a decline in overall economic development The act of obtaining funds from domestic markets has the potential to initiate liquidity crises and result in significant increases in interest rates, hence exacerbating the obstacles faced by private investment The study of classical discourse explores the complex interplay between public debt and tax policy, uncovering a range of economic ramifications The implementation of increased tax rates with the objective of reducing debt might potentially lead to a decrease in consumer buying power, thereby exerting a detrimental effect on economic vitality On the other hand, the implementation of both lower tax rates and heightened borrowing might potentially serve as catalysts for sustained economic growth in the long run Scholars in the field of classical economics provide a word of warning about the potential negative consequences of public debt They argue that it has the potential to undermine fiscal discipline, limit individuals' ability to get private credit, and deter both domestic and foreign investments As a result, these factors may present significant obstacles to the process of economic progress On the other hand, the Barro-Ricardo Equivalence Hypothesis (REH) offers a different viewpoint, suggesting that the negative economic consequences of public debt can depend on particular conditions The Rational Expectations Hypothesis (REH) argues that as long as the ability to repay debt remains viable, it is possible to manage the potential outcomes of public debt and limit its influence on macroeconomic factors Nonetheless, the complex relationship between public debt and many aspects of economic growth continues to be the subject of ongoing investigation and debate In the context of a highly integrated global economy, states have the complex task of making fiscal decisions that have significant implications for investment, consumption, and overall economic welfare This underscores the delicate connection between public debt and economic paths 2.2.3 Neoclassical theories of public debt and economic growth The ideas derived from neoclassical economists throughout the 1960s provide a significant viewpoint in the current discourse over the consequences of public debt The potential negative effects of higher taxes to pay for interest on a growing national debt are concerning because they could affect capital development The interplay between government borrowing and private investment, together with heightened credit risk premiums resulting in increased long-term interest rates, exacerbates the negative impacts of significant public debt on economic growth Furthermore, the presence of distortionary taxes resulting from future commitments serves to worsen the problem, possibly resulting in inflationary pressures The complex relationship between the immediate advantages and future ramifications of debt on the growth of the economy underscores a multidimensional and sophisticated dynamic While debt-financed investment might initially boost economic growth, the existence of elevated risk premiums linked to escalating public debt levels may result in higher borrowing expenses in the long run, thereby impeding continuous economic progress Moreover, the relationship between debt and economic growth is further complicated due to the adoption of countercyclical fiscal policies In the midst of continuous deliberations, the advent of threshold theory posits a nonlinear correlation between levels of public debt and economic progress According to the theoretical framework, there is a proposition that a modest augmentation in public debt has the potential to foster economic development Nevertheless, it is important to note that exceeding a crucial threshold might lead to unfavorable consequences The aforementioned perspectives derived from neoclassical and neoKeynesian economic theories underscore the heterogeneous effects of public debt on economic advancement, underscoring the need for governments to attain a delicate balance in order to promote enduring and sustainable progress The cautionary story pertaining to the probable increase in interest rates resulting from the accumulation of public debt serves as a stark reminder of the hazards linked to budgetary strategies that are not sustainable scholars and policymakers that the advantages of public debt diminish and turn into disadvantages if a certain threshold is surpassed Nevertheless, the precise threshold value is a topic of continuous discussion, exhibiting variation among nations and undergoing changes as time progresses In their study, Hoang Khac Lich and Duong Cam Tu (2018) demonstrate that public debt has the potential to contribute positively to economic growth up to a certain threshold However, once this barrier is surpassed, the existence of public debt may impede future advancement The study conducted by Herndon et al (2014) provides evidence of a non-linear relationship between the debtto-GDP ratio and economic growth, particularly when considering ratios within the range of 0% to 30% As the debt-to-GDP ratio surpasses 90%, the connection between the two variables tends to exhibit a greater degree of linearity According to Cecchetti et al (2011), there exists a certain threshold at which debt begins to positively impact GDP per capita However, once this barrier is exceeded, the effect of debt on GDP per capita becomes negative According to Caner et al (2010), there exists a suggested threshold of 77% for the debt-to-GDP ratio, beyond which increasing levels of debt are associated with a decrease in annual economic growth These studies shed light on the intricate influence of public debt on economic growth, which is shaped by different threshold levels and their subsequent consequences 2.5 THE BASIS OF DESIGNING EMPIRICAL RESEARCH MODEL The study's empirical research approach is based on a thorough comprehension of the cyclical characteristics of fiscal policy in both developed and developing countries During periods of economic expansion, governments often adopt procyclical fiscal policies, whereas during economic downturns, they prefer to impose counter-cyclical measures Nevertheless, the implementation of pro-cyclical policies is sometimes seen with disapproval owing to the possible negative outcomes it may entail, such as reduced private expenditure during economic downturns and excessive economic expansion during periods of growth The propensity seen in developing countries may be attributed to several factors, including loan market inefficiencies as well as political variables such as institutional quality and political division While previous research investigations have mostly concentrated on government spending as a metric for assessing fiscal policy, the present study aims to expand the scope by including proxies for government revenue Regression analysis is a widely used statistical method in academic research for evaluating the correlation between the economic cycle and fiscal policy using variables such as government spending or fiscal balance This study is based on two divergent theories that provide the foundation for examining the influence of public debt on economic growth The first proposition posits that the increase in budget deficits leads to a corresponding rise in government borrowing, subsequently leading to inflated interest rates that impede private investment The second theoretical perspective posits the existence of a public debt threshold that optimizes economic development, suggesting that debt may have a beneficial impact on growth up to a certain level, beyond which its effects become detrimental Once this barrier is surpassed, negative outcomes arise, often as a result of the displacement of private investment The current body of empirical research produces ambiguous results about the correlation between public debt and economic progress The prevailing agreement indicates that there exists an ideal threshold of public debt that yields favorable outcomes, but exceeding this threshold results in adverse repercussions However, there is still a lack of understanding of the nonlinear impacts of public debt on economic growth in developing nations In order to bridge this existing research gap, the primary objective of this study is to examine the impact of public debt on the economic development of Vietnam Additionally, this study seeks to empirically evaluate two hypotheses: Hypothesis 1: The impact of public debt on economic development in Vietnam is asymmetric, indicating the presence of a nonlinear connection Hypothesis 2: Variations in public debt have distinct impacts on economic development in Vietnam, wherein reductions provide a favorable influence while augmentations yield an adverse influence This study uses NARDL (Nonlinear AutoRegressive Distributed Lag) econometric models and methods to build on previous research that looked at the nonlinear relationship between public debt and economic development in transition countries CHAPTER 3: RESEARCH METHODOLOGY 3.1 RESEARCH MODEL 3.1.1 VECM model The VECM model features the form: yt - yt-1 = (A1+ A2+…+Ap - I) yt-1 - (A2+…+Ap) (yt-1- yt-2) - (A3+…+Ap) (yt-2- yt3)-…- Ap (yt-p+1 - yt-p) + ut Δ yt = Π yt-1 + C1 Δ yt-1 + C2 Δ yt-2+…+ Cp-1 Δ yt-p+1+ ut Whereas: Π = -(I - A1 - A2 -…- Ap ); Ci = - Σpj=i+1 Aj , i = 1,2….p-1 The model containing the term Π yt-1 is the error correction part of ECM If yt has k cointegration relations, then Π has the form: Π= α x β (kxr) (rxk) Then: Δ yt = αβ yt-1 + C1 Δ yt-1 + C2 Δ yt-2+…+ Cp-1 Δ yt-p+1+ ut Given ECt-1 = β yt-1: non-stationary sequence combinations in yt to a stationary sequence, and ECt-1 represents the residuals of these non-stationary sequence combinations And ECt-1 represents the state of imbalance at time t-1, then α represents the adjustment coefficient of Δ yt when an imbalance arises During the evaluation and selection process of a suitable model, tests are performed to evaluate the stationarity of time series data By doing the unit root test with a significance level of α = 0.05%, the rejection of the null hypothesis provides evidence to support the assertion that the data series under consideration exhibit stationarity Additional tests conducted for cointegration demonstrate a significant association between the variables The selection of lags for the model is determined by many factors, including LR, FPE, AIC, and HQ, as well as incorporating insights from Johansen (1990) The process of guaranteeing the stability of a model entails the use of the AR Root Test to verify the limitations imposed on eigenvalues The preliminary evaluation of stationarity using the unit root test reveals that the data series are stationary at the first difference (I(1)) The use of Johansen's approach reveals that the data series exhibit a significant association, hence justifying the selection of the Vector Error Correction Model (VECM) regression model The use of a regressive Vector Error Correction Model (VECM) for careful analysis is justified by the alignment of stationary variables and the presence of verified cointegration 3.1.2 NARDL model NARDL regression model will be considered and selected after conducting tests, especially testing for stationary of time series Non-stationary time series will be stationary transformed by taking the difference at a higher order + + − ∆𝐺𝐷𝑃𝑡 = 𝛼 + 𝛽1 𝐺𝐷𝑃𝑡−1 + 𝛽2+ 𝐸𝑋𝑃𝑡−1 + 𝛽3− 𝐸𝑋𝑃𝑡−1 + 𝛽4+ 𝐼𝑅𝐵𝑡−1 + − − − 𝛽5− 𝐼𝑅𝐵𝑡−1 + 𝛽6+ 𝐿𝐼𝐴+𝑡−1 + 𝛽7− 𝐿𝐼𝐴−𝑡−1 + 𝛽8+ 𝑈𝑆𝐷/𝑉𝑁𝐷00+ 𝑡−1 + 𝛽9 𝑈𝑆𝐷/𝑉𝑁𝐷00𝑡−1 + + + − − 𝑚 + + − − ∑𝑚 𝑖=0(𝜃𝑖 ∆𝐸𝑋𝑃𝑡−𝑖 + 𝜃𝑖 ∆𝐸𝑋𝑃𝑡−𝑖 ) + ∑𝑖=0(𝜃𝑖 ∆𝐼𝑅𝐵𝑡−𝑖 + 𝜃𝑖 ∆𝐼𝑅𝐵𝑡−𝑖 ) + + + − − 𝑚 + + − ∑𝑚 𝑖=0(𝜃𝑖 ∆𝐿𝐼𝐴𝑡−𝑖 + 𝜃𝑖 ∆𝐿𝐼𝐴𝑡−𝑖 ) + ∑𝑖=0(𝜃𝑖 ∆𝑈𝑆𝐷/𝑉𝑁𝐷00𝑡−𝑖 + 𝜃𝑖 ∆𝑈𝑆𝐷/ 𝑉𝑁𝐷00− 𝑡−𝑖 ) + 𝜀𝑡 + Whereby, 𝛽𝑖+ (∑𝑚 𝑖=0 𝜃𝑖 ) and − 𝛽𝑖− (∑𝑚 𝑖=0 𝜃𝑖 ) are the long-run (short-run) coefficients showing the positive and negative effects of 𝐸𝑋𝑃𝑡 , 𝐼𝑅𝐵𝑡 , 𝑈𝑆𝐷/𝑉𝑁𝐷00𝑡 , 𝐿𝐼𝐴𝑡 on 𝐺𝐷𝑃𝑡 Asymmetric effects are the combination of positive and negative effects of public debt on economic growth Public debt within certain limits can have positive and supportive effects on economic growth However, when the public debt exceeds the controllable level, the wasteful and unreasonable use of public debt will have negative effects on the economy The author constructs a NARDL research model to investigate the nonlinear impacts of public debt on Vietnam's economic growth based on related theories and previous empirical studies NARDL is utilized because, when applied, it analyzes the sign and regression coefficient of the equation, actively assisting the analysis of the impact direction and magnitude of the variables included in the model 3.2 VARIABLES DESCRIPTIONS OF THE RESEARCH MODEL 3.2.1 The variables of the model of the relationship between fiscal policy and the business cycle This study provides a fresh perspective on Vietnam's fiscal policy's response to the economic cycle in terms of public spending The thesis has built a research model with variables indicating the economic cycle and fiscal policy based on Talvi and Végh's (2005) model Table 3.1 Sources of variables used in the model Variables Symbol Ratios/ Calculation Source method Vietnam production GDP GDP index (%) IMF Government LNEXP EXP index, logarithm IMF LNTAX TAX index, logarithm IMF LNLIA LIA index, logarithm IMF Expenditures Government tax revenues Public debts Source: Author’s synthesis According to the research of Debrun and Kapoor (2011), Furceri and Jalles (2016), and Afonso and Jalles (2013), the size of government spending is frequently regarded as the most significant factor in determining fiscal policy stability Keynes (1936) argued that the economic cycle is caused by fluctuations in economic growth accompanied by recessionary peaks and troughs Therefore, the study used certain variables, including economic growth (GDP) reflecting the business cycle and government spending (representing fiscal policy) 3.2.2 The variables of the model of public debt on economic growth The study includes five variables, which are presented in detail in Table 3.2: economic growth, government spending, lending interest rates, USD/VND exchange rate, and government debt The independent variable GDP symbolizes economic growth, whereas public debt reveals the government's domestic and foreign debt levels In addition, the study employs control variables, including government expenditures, lending interest rates, and the USD/VND exchange rate These are the transmission factors associated with monetary policy and fiscal policy for analyzing the effect of public debt on economic growth These model variables are consistent with theory and prior empirical research (Mencinger et al., 2015; Checherita and Rother, 2010; Bexheti et al., 2020) Table 3.2 Description of the model variables Variable Description Unit Notes GDP Economic growth % Dependent variable LIA Public debt Logarit EXP Government Expenditures Logarit Control variable IRB Lending rate % Control variable USD/VND00 USD/VND exchange rate Logarit Control variable Asymmetric variable Source: Author’s synthesis The following particular model has been created: 𝐺𝐷𝑃𝑡 = 𝛽0 + 𝛽1 𝐸𝑋𝑃𝑡 + 𝛽2 𝐼𝑅𝐵𝑡 + 𝛽3 𝑈𝑆𝐷/𝑉𝑁𝐷00𝑡 + 𝛽4 𝐿𝐼𝐴𝑡 + 𝜇𝑡 3.3 RESEARCH DATA 3.3.1 Research data of the model of the relationship between fiscal policy and the business cycle Table 3.3 Descriptive statistics of the variables Values EXP GDP LIA Mean 32.48437 6.536612 16.45983 Median 32.61859 6.730000 16.86875 Maximum 33.77033 9.261000 17.01868 Minimum 30.84740 0.390000 15.67639 Std Dev 0.933886 1.447579 0.519136 Skewness -0.347415 -1.114815 -0.244880 Kurtosis 1.696106 6.125947 1.176560 Jarque-Bera 7.731208 52.21407 12.62533 Probability 0.020950 0.000000 0.001813 Sum 2761.171 555.6120 1399.085 Sum Sq Dev 73.26002 176.0208 22.63819 Observations 85 85 85 Source: Author’s summary and calculation The data is applicable for the years 2000 through 2021 The percentage of Vietnam's gross domestic product (GDP) is derived from the IMF's international financial data Government Spending Variables, Government Tax Revenue, and Government Debt are collected from from IMF international financial statistics The government's expenditure; Government tax revenue and government debt is a trend variable that does not have a normal distribution; the deviation must be very large; research is required to convert this variable to logarithmic base natural form so that the variable has a distribution close to the distribution standard and meets the model's input data conditions In addition, variables with an annual frequency are frequently affected by the seasonal factor Using the Census X12 tool, this study isolates the impact of the seasonal element from the data series 3.3.2 Research data of the model of public debt on economic growth Table 3.4 shows the descriptive statistics of the variables used in the study, including GDP, EXP, IRB, LIA, USD/VND00 Where GDP, IRB and USD/VND00 are regularly distributed, while EXP has a large standard deviation, a high mean, and a severely skewed Jarque-Bera index Table 3.4 Descriptive statistics of variables Value Mean Median Maximum Minimum Std Dev Skewness Kurtosis Jarque-Bera Probability Sum Sum Sq Dev Observations IRB GDP LIA 10.16415 6.536612 16.45983 11.78948 32.48437 9.570000 6.730000 16.86875 11.80035 32.61859 20.10000 9.261000 17.01868 12.01430 33.77033 6.953333 0.390000 15.67639 11.51293 30.84740 2.840799 1.447579 0.519136 0.169637 0.933886 1.245676 -1.114815 -0.244880 -0.069779 -0.347415 4.538710 6.125947 1.176560 1.361722 1.696106 30.36790 52.21407 12.62533 9.574656 7.731208 0.000000 0.000000 0.001813 0.008335 0.020950 863.9525 555.6120 1399.085 1002.106 2761.171 677.8918 176.0208 22.63819 2.417236 73.26002 85 85 USDVND EXP 85 85 85 Source: Regression result from Eviews10 IMF financial statistics (IFS) quarterly data are used to examine the nonlinear influence of public debt on Vietnam's economic growth over the period from the first quarter of 2000 to the first quarter of 2021 Vietnam's gross domestic product (GDP) and lending rate (IRB) are expressed as a percentage; government debt (LIA), government spending (EXP), and USD/VND00 are non-normally distributed propensity variables, thus they must be transformed to logarithmic form CHAPTER 4: RESEARCH RESULTS AND DISCUSSION 4.1 EXAMINING THE RELATIONSHIP BETWEEN FISCAL POLICY AND THE BUSINESS CYCLE 4.1.1 Tests of the research model • • • • Stationary Test Co-intergration Test Causality Test Stability Test 4.1.1 Results of testing the relationship between fiscal policy and economic growth Cointegrating Eq: CointEq1 D(GDP(-1),2) 1.000000 EXP01(-1) - 0.095912 (0.05522) [-1.73677] D(LIA(-1),2) 1.881209 (0.99337) [-1.89376] D(TAX(-1),2) 26.02291 (2.08690) [-12.4697] C 3.100242 CointEq1 -0.910403 4.1 EXAMINING THE IMPACT OF PUBLIC DEBT ON ECONOMIC GROWTH 4.1.1 Tests of the research model • Stationary Test • The Ramsey Test • • • • The Breusch/Pagan Test Nonlinear co-integration test Short-run and long-run asymmetry testing The Wald Test 4.1.1 Research results 4.2.2.1 Asymmetrical impact of public debt on economic growth in the long- run Variables constant Std Err t-values Pvalues GDP1(-1) 0.181591 0.112907 1.608325 0.1124 GDP1(-2) -0.406895 0.100292 -4.057119 0.0001 EXP1_POS -7.792198 1.478342 -5.270904 0.0000 EXP1_NEG -4.044499 0.943741 -4.285600 0.0001 EXP1_NEG(-1) -3.502798 1.351912 -2.590995 0.0117 IRB1_POS 0.040734 0.123100 0.330899 0.7417 IRB1_NEG 0.169743 0.084964 1.997836 0.0497 -0.194678 0.103401 -1.882748 0.0640 LIA1_POS 0.352669 1.051407 0.335425 0.7383 LIA1_NEG -0.557014 1.071044 -0.520066 0.6047 USDVND1_POS -9.718015 9.086940 -1.069449 0.2886 USDVND1_NEG -3.628589 8.181509 -0.443511 0.6588 0.596055 2.063777 0.0429 IRB1_NEG(-1) C 0.288818 R-squared 0.564925 Prob(F-statistic) 0.000000 Ramsey RESET P-value = 0.0065 Breusch/Pagan heteroskedasticity P-value = 0.0084 Note: * < 0,1; ** < 0,05; *** < 0,01 This study utilizes a cumulative dynamic multiplier analysis technique, specifically the NARDL model, to examine the asymmetric effects of government debt expansions on both short-term and long-term economic growth The findings indicate that an increase in government debt leads to rapid initial development, but as time progresses, the buildup of debt becomes a hindrance to economic growth The case study of Vietnam serves as a prime example of how government debt may have varying effects, underscoring the need for effective economic governance The resolution of fiscal imbalances in growing countries such as Vietnam necessitates the implementation of diligent debt management practices, the promotion of resource efficiency, and the formulation of plans aimed at diminishing dependence on public debt as a means of achieving long-term economic advancement CHAPTER 5: CONCLUSION AND POLICY IMPLICATIONS 5.1 CONCLUSION The primary objective of this study endeavor is to examine the fiscal policy options used by Vietnam and assess their ramifications on the country's economic growth This analysis explores the proclivity of developing countries, such as Vietnam, to use procyclical policies while juxtaposing them against the implementation of countercyclical measures in more affluent nations The research examines the relationship between government spending, debt, and tax revenue, revealing a positive correlation between expenditure and economic growth while seeing a negative association between debt and tax revenue The study highlights the difficulty of matching fiscal policy with economic cycles, specifically in the context of Vietnam This problem is especially evident in the acquisition of resources during periods of economic boom and the constraints imposed by credit limits during economic downturns The aforementioned trade-off between investment and pay reduction has substantial importance for further growth and requires meticulous administration 5.2 POLICY IMPLICATIONS Developing economies, such as Vietnam, often use procyclical fiscal policies as a result of many variables, including heightened government expenditure during economic upswings propelled by capital inflows and exports Nevertheless, it is important to note that this pattern has the potential to be reversed in times of economic recession, resulting in a reduction in government spending The prudent management of fiscal resources and the avoidance of excessive indebtedness are crucial factors to be taken into account The findings of the research indicate that a reduction in public debt has a favorable influence on economic growth However, it is important to note that exceeding a certain barrier may lead to negative consequences, underscoring the need to exercise caution in managing debt Policy implications include the optimization of resource allocation, the monitoring of debt levels, and the strategic deployment of government expenditure The document also advises against excessive dependence on either foreign or domestic debt, highlighting the need to maintain wellbalanced fiscal policies in order to achieve long-term economic development and effectively address debt reduction endeavors 5.3 LIMITATIONS OF THE RESEARCH This research primarily focuses its attention on Vietnam, taking into account the limitations arising from the availability of data and the peculiarities of the model It is important to note that the conclusions may be influenced by the restrictions on data availability, particularly prior to the year 2000 The qualitative character of domestic research imposes limitations on the ability to extensive comparisons, while the lack of outlier metrics has an influence on the outcomes Future research endeavors may delve into the examination of indirect mechanisms via which public debt influences economic growth while also broadening the scope of study to include outlier issues In summary, this research emphasizes the complex relationship between fiscal policy, debt, and economic development in Vietnam and other comparable nations It underscores the need for maintaining a balanced approach to fiscal management, allocating resources optimally, and adopting cautious debt practices to achieve sustainable economic growth and financial stability LIST OF SCIENTIFIC WORKS No Name The Relationship of Fiscal Policy and Economic Cycle: Is Vietnam Different? Asymmetric impacts of Public debt on Economic growth: Empirical Evidence from Vietnam Participation First Author First Author Journal ISSN Issue Page Publish Date/Yea r Journal of Risk and Financial Management ISSN 19118074 16 281 05/2023 International Journal of Professional Business Review ISSN 25253654 01 05/2023