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Does Korea have twin deficits?

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  • Chul-Hwan Kim
  • Donggeun Kim

Abstract

Using the modified Wald test suggested by Toda and Yamamoto (1995), the study examines whether higher budget deficits lead to greater current account deficits in Korea. This test allows one not only to examine the general validity of twin deficits hypotheses, but also to predict future Korean external balance positions. The empirical results indicate that a unidirectional causal relation running from the current account deficit to the budget deficit is present in Korea.

Suggested Citation

  • Chul-Hwan Kim & Donggeun Kim, 2006. "Does Korea have twin deficits?," Applied Economics Letters, Taylor & Francis Journals, vol. 13(10), pages 675-680.
    • Handle: RePEc:taf:apeclt:v:13:y:2006:i:10:p:675-680
    DOI: 10.1080/13504850500404910
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    References listed on IDEAS

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