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Twin deficits in CEEC economies: evidence from panel unit root tests

Author

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  • Alberto Bagnai

    (Università G. D'Annunzio di Chieti-Pescara and Università Telematica “Leonardo da Vinci”)

Abstract

This paper analyses the relation between the external and government deficits in a panel of CEEC economies. We first assess by panel unit root tests whether the fiscal and external intertemporal budget constraints hold, and then examine the role of public and private expenditure in the dynamics of external indebtedness by panel regression. The results show that government deficit is a significant but relatively minor source of external imbalances, and that the external indebtedness of CEEC economies is sustainable.

Suggested Citation

  • Alberto Bagnai, 2010. "Twin deficits in CEEC economies: evidence from panel unit root tests," Economics Bulletin, AccessEcon, vol. 30(2), pages 1071-1081.
    • Handle: RePEc:ebl:ecbull:eb-10-00171
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    References listed on IDEAS

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    Cited by:

    1. Ilir MITEZA, 2012. "Fiscal Deficits, Current Deficits and Investment: A Panel Causality Framework of 20 OECD countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(1).
    2. Matthias Hartmann & Helmut Herwartz, 2012. "Consolidation first - About twin deficits and the causal relation between fiscal budget and current account imbalances," Economics Bulletin, AccessEcon, vol. 32(4), pages 3313-3319.
    3. Veronika Å uliková & Marianna SiniÄ Ã¡ková & Denis Horváth, 2014. "Twin Deficits in Small Open Baltic Economies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(2), pages 227-239, March.
    4. Tosun, M. Umur & Iyidogan, Pelin Varol & Telatar, Erdinç, 2014. "The Twin Deficits in Selected Central and Eastern European Economies: Bounds Testing Approach with Causality Analysis," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 141-160, June.
    5. Soo Xin Lin & Jerome Kueh, 2019. "Determinants of Current Account Balance in Six ASEAN Countries: A Panel Analysis Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(7), pages 129-129, July.

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    More about this item

    Keywords

    current account; budget deficit; panel data; twin deficits; sustainability;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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