This thesis investigates the effects of fiscal and monetary policies on aggregate demand (output) in selected Asian countries. These countries have been classified into three groups. The first group comprises five SAARC economies: Bangladesh, India, Nepal, Pakistan and Sri Lanka. The second group consists of the ASEAN-5: Indonesia, Malaysia, the Philippines, Singapore and Thailand. The last group is made up of two countries: Hong Kong and Republic of Korea (hereafter Korea). The choice of these twelve countries was determined by three reasons. First, they have large populations, large resource bases, and large markets. They are also among the emerging economies in the world. Second, they are located close by in the same region. They are also integrated by trade and monetary unions. Finally, they have similar socio-economic characteristics. The time period 1974-2007 was chosen because, throughout this period, most Asian countries implemented structural reforms. ... The present thesis deals with the following research issues for each selected Asian economy. First, the influence of fiscal and monetary policies on aggregate demand (output) will be examined. Second, the relative strengths of various shocks at different time horizons will be determined. Third, the dynamic responses of output, money supply, government expenditure, the real exchange rate and the foreign interest rate to each type of internal and external shocks will be analysed. Finally, the relative effectiveness of fiscal policy and monetary policy on aggregate demand (output) for each country will be investigated. Throughout the thesis, both time series and panel data analyses techniques are utilized. In relation to the time series, specific techniques are applied to investigate the above issues. Using open IS-LM equations, the aggregate demand function is estimated as a function of real money supply, real government expenditure, the real exchange rate and the nominal foreign interest rate.

This study presents new international evidence on the interdependence of governance and foreign direct investment (FDI) inflows based on twelve year data of 173 countries. Results from ordinary least squares and 2-stage least squares show that FDI and governance as proxied by average governance index of World Governance Institute of the World Bank are indeed interdependent. The implication is that FDI and governance go hand in glove i.e., FDI is determined by governance and vice-versa. We also examine the impact of adopting international accounting standards (IFRS) and legal origin of sample countries on FDI and governance. We find a significant impact of adopting international accounting standard (IFRS) and legal origin of the sample countries on governance rather than on FDI. This implies that adoption of IFRS strengthens governance and thereby allows free movement of capital around the world. We find the interdependence even when we control for certain macro economic factors as well as time, region and income factors. These findings have implications for individual governments of the world and international donor organizations to undertake tenable actions to improve the governance of countries.