Inspired by the Look East Policy, Malaysia aims to learn from such a successful Asian country as South Korea in order to break through its upper-middle-income trap. Using the dynamic threshold nonlinear approach, this comparative study is therefore timely to compare and contrast the nonlinear correlation between economic growth and government spending between these two nations. When considering two different measures of government size as the threshold variable, namely government operating/real GDP (GS1) and government investment/real GDP (GS2), the practical findings of this research indicate the presence of a threshold effect between government size and economic growth in the contexts of Malaysia and South Korea. Specifically, the BARS curve exists in Malaysia and South Korea when GS1 is set as the threshold variable. However, a U-shaped curve of nonlinear relationship exists in both countries when GS2 serves as the threshold variable. Interestingly, the threshold two-regime regression results show that while government operating expenditures in both Malaysia and South Korea are not found to be overspent and are beneficial for economic growth, the Malaysian government's investment expenditure has not achieved the full potential of accelerating economic growth compared to South Korea.

This paper discovers the asymmetric relation between government size and economic growth in Malaysia, an emerging Asian economy, by utilising a dynamic threshold nonlinear approach. The study finds empiric evidence that the threshold effect linking government size to economic growth in Malaysia exists when two different proxies of government size are set as the threshold variable. On closer inspection, it is found that an inverted U-shaped Armey curve is present when allowing for endogenous government size threshold proxied by government operating/real GDP. However, a U-shaped curve of nonlinear relationship exists instead when the government investment/real GDP serves as the threshold variable. In general, this paper gives policymakers a real insight into the optimal government size in Malaysia especially when designing an effectual fiscal policy to advance sustainable economic growth to materialise its Shared Prosperity Vision by the year 2030.

This paper examines the nonlinear effects of investor sentiment on asset pricing in Bursa Malaysia. The Fama and French three-factor model is re-augmented within a time-varying Markov regime-switching framework to investigate the three risk premiums, conditioned by four different proxies for investor sentiment (i.e. market-wide indicators). The study finds evidence that the stock returns movement of Bursa Malaysia exhibits a nonlinear two regimes pattern. Besides, changes in the investor sentiment to some extent function as a mediator in the regime switching dynamics between bear and bull market cycles in Malaysian stock returns. It is also found that an increase in positive sentiment of investors leads to a higher transition probability of regime switching during bear markets. In addition, the three risk premiums are time-variant, contingent upon the fluctuation of the proxies for investor sentiment within discrete regimes. The study finds that in general, the market premium falls when the stock market switches from bull to bear markets. On the contrary, both the size and value premiums increase when the stock market moves from bull to bear markets.

This study examines the heterogeneous effects of key macroeconomic determinants on economic growth in selected MENA economies using a pooled quantile regression framework. Unlike conventional mean-based approaches, this method captures variation across different segments of the conditional growth distribution. Using annual data for eight MENA economies over the period 2000–2023, the analysis evaluates how foreign aid, budget deficits, foreign direct investment, and trade openness are associated with growth under different economic conditions. The results reveal that foreign aid and fiscal deficits are more strongly associated with growth at lower quantiles, indicating greater relevance during low-growth episodes, while their effects weaken or become insignificant at higher quantiles. In contrast, foreign direct investment shows a stronger and more consistent positive association at higher quantiles, whereas trade openness is mainly significant at the lower end of the growth distribution. These findings provide distribution-sensitive evidence on growth determinants in structurally diverse MENA economies. From a policy perspective, the results suggest that macroeconomic strategies should be tailored to country-specific growth conditions rather than relying on uniform policy frameworks across the region.

The paper seeks to determine whether renewable energy is a future pathway for society or rather a temporary stage leading towards sustainable sources of energy. It evaluates the factors that affect the use of renewable energy in Malaysia through modelling their long-term relationship and short-term causalities. Time-series data collected from 1970 to 2021 is used in the Johansen cointegration test and Vector Error Correction Model (VECM) to determine the association among renewable energy consumption, per capita GDP, foreign direct investments (FDI), carbon dioxide (CO₂) emissions, oil prices, trade openness, and urbanisation. There is evidence of a strong positive long-term association between renewable energy consumption and per capita GDP. However, there is evidence of a negative long-term relationship between renewable energy and FDI, CO₂ emissions, oil prices, and urbanisation. There is a positive relationship between renewable energy consumption and trade openness in the long term. In addition, short-term causality analysis shows the existence of a feedback loop between renewable energy consumption, economic growth, and FDI. Overall, the paper provides empirical evidence for the carbon-neutral target set by Malaysia in 2050.