Information from the abstract
This study examines the dynamic relationships among public debt, monetary policy, and capital accumulation in Thailand from 2005 to 2025. Using a Vector Error Correction Model (VECM), Impulse Response Functions (IRFs), and Forecast Error Variance Decomposition (FEVD), the analysis distinguishes short-run adjustments from long-run relationships. The results indicate that public debt is associated with a temporary increase in aggregate fixed capital formation in the short run, while the long-run relationship is consistent with a crowding-out mechanism. Monetary tightening is associated with lower capital formation and higher public debt over time. FEVD results show that public debt and policy-rate shocks jointly account for approximately 35% of the variation in aggregate fixed capital formation over a 12-quarter horizon. These findings highlight the importance of debt dynamics and monetary-fiscal interactions for capital accumulation in a small open emerging economy.
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Related topics: Monetary Policy and Economic Impact · Fiscal Policies and Political Economy · Global Financial Crisis and Policies
Thai researcher and institutional participation
Rachata Juthaphiw · Suthat Wongsakulchai · Rajamangala University of Technology Suvarnabhumi · Mahidol University
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