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Triple Deficit Hypothesis: A Panel ARDL and Dumitrescu-Hurlin Panel Causality forEast African Countries

Author

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  • Magoti, Edwin
  • Mabula, Salyungu
  • Ngong’ho, Sende B

Abstract

This paper aimed at examining the relevance of triple deficit hypothesis for East African countries, specifically assessing the dynamics of savings gap (SG), fiscal balance (FB) and current account balance (CAB). Secondary data from the International Monetary Fund (IMF)for the time period 2004 through 2018 were used. The study adopted Panel ARDL model and Dumitrescu-Hurlin panel granger causality analysis that allows capturing of slope heterogeneity among each member. The study findings revealed both fiscal balance and savings-investment gap to have a positive impact on current account balance for East African countries. However, the short run coefficients were not significant at both 5% and 10% levels of significant, implying that fiscal balance and savings-investment gap have no impact on current account balance in the short run, but the study further found evidence that the current account balance is on average -1.2991 in the short run for East African countries. Additionally, based on the current study, Dumitrescu-Hurlingranger causality results gave reasonable grounds to conclude that triple deficit hypothesis in East African countries does not hold.

Suggested Citation

  • Magoti, Edwin & Mabula, Salyungu & Ngong’ho, Sende B, 2020. "Triple Deficit Hypothesis: A Panel ARDL and Dumitrescu-Hurlin Panel Causality forEast African Countries," African Journal of Economic Review, African Journal of Economic Review, vol. 8(1), January.
    • Handle: RePEc:ags:afjecr:301055
    DOI: 10.22004/ag.econ.301055
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    Cited by:

    1. Elvis K. Ofori & Simplice A. Asongu & Ernest B. Ali & Bright A. Gyamfi & Isaac Ahakwa, 2024. "Environmental impact of ISO 14001 certification in promoting Sustainable development: The moderating role of innovation and structural change in BRICS and MINT, and G7 economies," Working Papers of the African Governance and Development Institute. 24/014, African Governance and Development Institute..
    2. Samson Nonso Okafor & Chukwunonso Ekesiobi & Ogonna Ifebi & Stephen Kelechi Dimnwobi & Simplice A. Asongu, 2022. "Testing the triple deficit hypothesis for sub‐Saharan Africa: Implications for the African Continental Free Trade Area," African Development Review, African Development Bank, vol. 34(1), pages 142-153, March.
    3. Umaima Arif & Maryam Latif & Asma Arif, 2024. "Assessing the triple deficit hypothesis in G-7 and D-8 countries: an evidence from heterogeneous panel methods," International Journal of Economic Policy Studies, Springer, vol. 18(2), pages 497-527, August.
    4. Engy Raouf, 2020. "A Non-Linear Autoreggresive Distributed Lag Analysis of the Triple Deficit Hypothesis in the Mena Region," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(8), pages 895-905, August.
    5. Panait, Mirela & Apostu, Simona Andreea & Vasile, Valentina & Vasile, Razvan, 2022. "Is energy efficiency a robust driver for the new normal development model? A Granger causality analysis," Energy Policy, Elsevier, vol. 169(C).

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