A Structural VAR (SVAR) analysis of fiscal shocks on current accounts in India
The stimulus packages announced to deal with the economic slowdown has increased the fiscal deficit of many countries and it spurred the debate on the possible effect of these fiscal shocks on other economic variable especially the current account. In this study, we examine the effect of fiscal deficit on current account of India using the VAR as well as the Structural VAR (SVAR) analysis. Our analysis indicates that the fiscal deficit is positively affecting the current account deficit in India, as predicted by the twin deficit hypothesis. Therefore, the historical data indicates the presence of the twin deficits phenomenon in Indian context.
Year of publication: |
2014
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Authors: | Suresh K.G. ; Tiwari, Aviral Kumar |
Published in: |
Macroeconomics and Finance in Emerging Market Economies. - Taylor & Francis Journals, ISSN 1752-0843. - Vol. 7.2014, 1, p. 140-153
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Publisher: |
Taylor & Francis Journals |
Saved in:
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