Twin deficit hypothesis mainly states that government budget deficits will cause trade deficits. However, this is not the only theoretically possible relationship between the budget deficit and the trade deficit. On the other extreme if Ricardian equivalence hypothesis holds it is also possible...

Currently the U.S. is experiencing record budget and current account deficits, a phenomenon familiar from the "Twin Deficits" discussion of the 1980s. In contrast, during the 1990s productivity growth has been identified as the primary cause of the US current account deficit. We suggest a...

The aim of our paper is to explore empirically the existence of the long-run relationship and the direction of causality between the budget and current account deficits for some selected Central and Eastern European economies. Bulgaria, Latvia, Lithuania, Poland, Romania, Serbia and Slovenia are...

Just before the last G20 meeting in London and following the quantitative easing measures taken by FED it has broken into the news that, during an internal discussion, IMF raised a really provocative issue: should the non-Euro EU members join the Euro very rapidly?! Considering the developing...

This paper evaluates the effect of disaggregated fiscal spending (consumption, capital formation and budget deficit) on private investment in both developed and developing countries using a panel data over the period of 2000-09. The results indicate that the elasticity of private investment with...

Latest evolutions predict a pessimistic perspective for international capital markets, 2008 proving to be the year characterized by financial shocks amplified by echoing bankruptcies in the financial and banking sector, nationalizations, takeovers and unforeseen restructurings. Being integrated...

In conditions of high exchange rate volatility, entities conducting foreign trade transactions are subject to currency risk exposures, which may have a significant impact on financial performance and operating profitability. The research approach is oriented to identify the possibility to...

Purpose - This paper investigates the twin deficit hypothesis for Ghana in view of the persistent co-movement between the budget deficit (BD) and current account deficit (CAD) over the past three decades. Design/methodology/approach - The paper uses annual data for the period 1980-2014 and...

We study the relationship between the budget balance and the current account balance for European Union(EU) countries, using quarterly data from1995 to2020. Through the use of panel Granger causality tests and a panel SUR model, we conclude that the relationship is bi-directional for the EU...

We investigate the bilateral relationship between government budget balances and current account balances for Portugal and Germany. We find that the response of the current account balance to the budget balance is greater in Portugal than in Germany. On the other hand, the response of the budget...