Budget Deficit Persistence and the Twin Deficit Hypothesis Test in Namibia

The article empirically examines the causal relationship between budget deficits and current account deficits in Namibia using annual data for the period 1991 to 2018. The article investigates this relationship in the context of Granger's causality test. Firstly, the results show that there is bidirectional causality between budget deficits and current account deficits. Secondly, the Pairwise Granger causality tests bolster these results by finding a similar outcome. Thirdly, the impulse response functions results show that positive shocks to the budget deficits will positively impact the current account deficits and vice versa. The latter finding provides government more policy handles to use to control both deficits