The Nexus between Standard of Living with Macroeconomics Variables in Malaysia: Pre-Pandemic Case Study

HRMARS - This study examines the relationship between selected macroeconomics variables and standard of living in Malaysia during the pre-COVID-19 period. Specifically, it is to investigate the effects of gross domestic product (GDP), unemployment, taxation, household consumption and population growth on the standard of living, proxied by the Consumer Price Index (CPI), using the time series data from 1976 – 2020. Multiple linear regression, unit root tests, Johansen-Juselius cointegration, and Granger causality analysis are employed to run the analysis. The findings show that taxes significantly affect the standard of living, indicating that changes in taxes are linked to changes in the cost of living. Besides that, GDP, population, unemployment, and household consumption do not have a significant impact. The results also suggest that the relationship among the variables mainly occur in the short term rather than the long term.