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Considerações teóricas e empíricas acerca da relação entre déficit público e déficit externo

Author

Listed:
  • Taiana Fortunato Araujo

    (Cedeplar-UFMG)

  • Alessandra Coelho de Oliveira

    (Cedeplar-UFMG)

  • Marco Flavio da Cunha Resende

    (Cedeplar-UFMG)

  • Sueli Moro

    (Cedeplar-UFMG)

Abstract

A consensus has not yet emerged about the relationship between budget deficit, external deficit and national saving. According to mainstream economic literature, the budget deficit can cause an insufficiency of national saving for a given investment rate. In such cases, the investment rate will not be reduced if foreign saving is absorbed, thus causing an external deficit. This is the twin deficits hypothesis. However, there are theoretical and empirical studies, which do not corroborate the twin deficits hypothesis. This paper concludes that there is no regular causal relationship between public deficits and external deficits. This conclusion is empirically conformed by means of estimating a panel data model for 35 countries during the 1991-2000 period.

Suggested Citation

  • Taiana Fortunato Araujo & Alessandra Coelho de Oliveira & Marco Flavio da Cunha Resende & Sueli Moro, 2007. "Considerações teóricas e empíricas acerca da relação entre déficit público e déficit externo," Textos para Discussão Cedeplar-UFMG td314, Cedeplar, Universidade Federal de Minas Gerais.
    • Handle: RePEc:cdp:texdis:td314
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    More about this item

    Keywords

    twin deficits; real exchange rate; panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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