Shocks to Malaysia's Exports: Temporary or Permanent?

ABSTRACT

The export sector has been the primary source of growth and development in the Malaysian economy. However, a high degree of openness as well as dependence on a few product categories have rendered Malaysia vulnerable to external export shocks. In this paper, we use unit root testing to demonstrate that exogenous export shocks can have either a temporary or a permanent effect on the Malaysian domestic economy depending on their country of origin. The resulting merits of country-specific export policies are discussed.

KEYWORDS:

• Exports
• Malaysia
• unit root