Twin deficits hypothesis in seacen countries: a panel data analysis of relationships between public budget and current account deficits

LAU, Evan ^[1] ; BAHARUMSHAH, Ahmad Zubaidi ^[2]
1. [1] Universiti Malaysia Sarawak
  
  Universiti Malaysia Sarawak
  
  Malasia
2. [2] Universiti Putra Malaysia
  
  Universiti Putra Malaysia
  
  Malasia
Localización: Applied econometrics and international development, ISSN 1578-4487, Vol. 6, Nº. 2, 2006, págs. 213-226
Idioma: inglés
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Resumen
- In this paper, the twin deficits hypothesis was examined using the panel data of nine SEACEN countries. Empirical results provide evidence to support the view that Asian budget deficit causes current account deficit directly as well as indirectly. From policy perspectives, the statistical analysis suggests that managing budget deficit offers scope for improvement in the current account deficit. However, this finding does not support the policy of manipulating the intermediate variables to reduce the twin deficits to a sustainable level since these variables appear to be endogenous in the system.