Does Institutional Quality Matter? Analysis of Macroeconomic Policy on Sustainable Growth of Thai Economy?

The effectiveness of fiscal and monetary policy in sustaining growth and facilitating recovery from economic crises is more and more considered as being influenced greatly by the quality of a country’s institutions. Strong institutions may determine how well macroeconomic policies perform under both stable and turbulent circumstances. This study examines how institutional quality moderates the effects of fiscal and monetary policies on economic growth in Thailand from Q1:2003 to Q4:2023. Using a combination method of BART and BASAD models, we identify voice and accountability and control of corruption as main institutional proxies, and among several input macroeconomic indicators, exports, household debt, gold prices and electricity generation are found to be important variables of growth performance during the study period. Our results show that institutional quality stabilizes and enhances the impact of policy interest rates and export growth while mitigating negative shocks from household debt and energy infrastructure challenges. Monetary policy effectiveness varies over time and depends on governance conditions. Fiscal policy effects are generally neutral but linked to institutional fluctuations. These findings highlight that strong institutions improve policy outcomes and support sustainable growth. This study empirically examines the moderating role of institutional quality in economic resilience and policy design in an emerging economy using microdata of Thailand as a focus based on the tvSURE model.