JOURNAL OF ECONOMIC DEVELOPMENT
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where G, GC , Y and N stand for total government expenditure, (total) government consumption expenditure, gross domestic product and population respectively. We use the Penn World Table (Version 5.6) for Malaysia. Annual data are for 1950-92. The newer studies such as Murthy (1994) and Lin (1995) also use Penn World Table data. The Penn World Table data developed by the International Comparison Project in cooperation with the World Bank are generally thought to be more reliable than data from other sources. A description of Penn World Table data and methodology are to be found in Summers and Heston (1991). Since the Penn World Table does not contain data on government consumption expenditure, we will limit our testing using all but (b) version.