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On the Dynamics of the Greek Twin Deficits: Empirical evidence over the period 1960 – 2007

Author

Listed:
  • Panagiotis Pantelidis

    (Technological Education Institute of Serres, Department of Business Administration, Serres, Greece)

  • Emmanouil Trachanas

    (Aristotle University of Thessaloniki, Department of Economics, Greece)

  • Athanasios L. Athanasenas

    (Technological Education Institute of Serres, Department of Business Administration, Serres, Greece)

  • Constantinos Katrakilidis

    (Aristotle University of Thessaloniki, Department of Economics, Greece)

Abstract

One of the most important open macroeconomic issues, during the current global economic recession, concerns the sustainability of persistent budget and trade deficits as well as possible interactions between them. These deficits are most crucial due to severe debt servicing costs, faced by today's economies despite their development level. This paper presents time series evidence over the period 1960 up to 2007, using data of the Greek Economy. Our results confirm 'weak' sustainability of both deficits and evidence in favor of the Keynesian rationale regarding the 'twin deficits hypothesis'

Suggested Citation

  • Panagiotis Pantelidis & Emmanouil Trachanas & Athanasios L. Athanasenas & Constantinos Katrakilidis, 2009. "On the Dynamics of the Greek Twin Deficits: Empirical evidence over the period 1960 – 2007," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 2(2), pages 9-32, December.
    • Handle: RePEc:tei:journl:v:2:y:2009:i:2:p:9-32
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    References listed on IDEAS

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    1. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    2. Peter Liu & Evan Tanner, 1995. "Intertemporal solvency and breaks in the US deficit process: a maximum-likelihood cointegration approach," Applied Economics Letters, Taylor & Francis Journals, vol. 2(7), pages 231-235.
    3. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    4. Salvatore, Dominick, 2006. "Twin deficits in the G-7 countries and global structural imbalances," Journal of Policy Modeling, Elsevier, vol. 28(6), pages 701-712, September.
    5. Normandin, Michel, 1999. "Budget deficit persistence and the twin deficits hypothesis," Journal of International Economics, Elsevier, vol. 49(1), pages 171-193, October.
    6. Haug, Alfred A, 1991. "Cointegration and Government Borrowing Constraints: Evidence for the United States," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(1), pages 97-101, January.
    7. Tanner, Evan & Liu, Peter, 1994. "Is the Budget Deficit "Too Large"?: Some Further Evidence," Economic Inquiry, Western Economic Association International, vol. 32(3), pages 511-518, July.
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    Cited by:

    1. Litsios, Ioannis & Pilbeam, Keith, 2017. "An empirical analysis of the nexus between investment, fiscal balances and current account balances in Greece, Portugal and Spain," Economic Modelling, Elsevier, vol. 63(C), pages 143-152.
    2. Algieri, Bernardina, 2013. "An empirical analysis of the nexus between external balance and government budget balance: The case of the GIIPS countries," Economic Systems, Elsevier, vol. 37(2), pages 233-253.
    3. Katrakilidis Constantinos & Trachanas Emmanouil, 2011. "Has the Accession of Greece in the EU Influenced the Dynamics of the Country’s “Twin Deficits”? An Empirical Investigation," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 45-54.

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    More about this item

    Keywords

    Budget and Trade Deficits; Sustainability; Twin Deficits Hypothesis; Cointegration; Greek Economy (1960-2007);
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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