Influence of Real Interest Rate on Growth of East Asian Pacific Middle Income States: A Panel Data Analysis

Abstract

This study aims to investigate the influence of real interest rate on growth of East Asian Pacific middle income states. In developing economies, interest rates play a critical role in shaping financial stability and growth. This study has used panel data of East Asian Pacific middle income countries by applying Random Effect (RE) and Generalized Methods of Moments (GMM) model for the period 2000 to 2024. The outcomes indicate that the interest rate exerts negative impact on growth of these states. The study suggests that the authorities of East Asian middle income countries should control interest rate so that economic development of these countries could be upstretched.

Keywords: Real Interest Rate, Economic Development, and GMM