Study of Economic Growth in Thai Economy <Article>

This empirical investigation seeks to detect empirical explanations for the behavior of the Thai economy and its production input efficiency within the process of economic development for last three decades. The notion of estimated parameters used is the elasticity or productivity, which has estimated through the econometric estimation of Cobb-Douglas production function. After conducting various statistical test, AR(1) model incorporating some input factors production function is superior to ARCH-type specifications for growth of Thai economy. A significant AR coefficient demonstrates the martingale process that suggests a long memory in any change in the annual gross domestic output. A second aspect of this study is to argue against the traditional belief that the estimated parameters of production inputs are time-varying process. The empirical findings from a state space model suggest evidence that they vary through time. They also shed elucidate the sensitivity of input factor efficiency following the sharp fallout in the 1997 financial crisis. The current absorptive capability of technological transfer from foreign countries via indirect channels seems to be significantly improved. A third finding is that the framework of inflation targeting has not gain trustworthiness to the marketplace and Thai economy has increasingly relied on capital investment. Time-varying parameter method also provides evidence of two reversal direction of inflation uncertainty on economic growth from negative to positive effect.