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Twin Deficits Phenomenon in the West African Economic and Monetary Union Countries: Panel Data Analysis

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  • Yeboua, Kouassi

Abstract

For a long time, the West African Economic and Monetary Union (WAEMU) countries have been experiencing persistently high budget and current deficits. This study was undertaken to empirically test the "Twin Deficits Hypothesis" in these countries. The analysis was conducted within the framework of the Panel Vector autoregressive (VAR) approach over the period 1975a-2013. In contrast to the conventional view which claims a one-way relationship between budget and current account deficits, the results show that budget deficits lead to a deterioration in the current account balance, and vice versa (bilateral relationship). We also found that budget deficits have an impact on current account balance mainly through imports

Suggested Citation

  • Yeboua, Kouassi, 2020. "Twin Deficits Phenomenon in the West African Economic and Monetary Union Countries: Panel Data Analysis," Working Papers 732b4ef7-fbf8-4564-a64e-b, African Economic Research Consortium.
    • Handle: RePEc:aer:wpaper:732b4ef7-fbf8-4564-a64e-b2c7bc11d4f4
    Note: African Economic Research Consortium
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