Analysis of Effects of Macroeconomic Policies on the Economic Recovery of Laos PDR after the Covid-19 Pandemic

Abstract

This study investigates the effects of monetary and international economic factors on the economic growth and stability of Laos by using quarterly time series data from Q1 2017 to Q3 2023. An auto auto-regressive distribution lag (ARDL) model was applied to the model estimation. This study also revealed the problem and transmission mechanism of Laos’ economic recovery. Based on empirical results, a negative relationship between CPI and GDP can be affirmed. Furthermore, it can be confirmed that money supply, bank interest rates, and exchange rates have a positive impact on CPI and GDP. However, the relationship between goods export value and GDP is negative. Moreover, it can be concluded that all independent variables have more varied effects on GDP than on CPI. Thus, the government can adapt the empirical results as tools and guidelines for effective and efficient monetary and international economic policy implementation to enhance economic recovery and accelerate sustainable economic development and growth. Currently, the critical economic problem of Laos that needs to solve be solved is rapidly increasing inflation. Therefore, the high inflation rate must be reduced to avoid the long-term risk of hyperinflation.