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The link between government budget and current account in the Baltic countries

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  • Misztal, Piotr

Abstract

The main aim of the article is theoretical and empirical analysis of the causal relationship between the budget balance and the current account balance in the Baltic countries (Latvia, Lithuania and Estonia) in the period 1999-2010. In the paper are used methods based on the literature study of international economics and international finance as well as econometric methods (Vector Autoregressive Model - VAR). The results of investigation clearly point at the existence of negative relationship between fiscal and current account balances in the analyzed countries. At the same time it was revealed stronger impact of the current account balance on the government balance than the impact of the government balance on the current account balance in Latvia, Lithuania and Estonia

Suggested Citation

  • Misztal, Piotr, 2012. "The link between government budget and current account in the Baltic countries," MPRA Paper 40784, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40784
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    More about this item

    Keywords

    government balance; current account; VAR model;
    All these keywords.

    JEL classification:

    • 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
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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