Twin Deficits in Sub-Saharan African Countries: Evidence through debt

Idrys Fransmel Okombi ()
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Idrys Fransmel Okombi: Marien Ngouabi University

Economics Bulletin, 2020, vol. 40, issue 3, 2550-2564

Abstract: This article tests the twin deficits hypothesis using different debt regimes with a panel of 30 African countries over the period 2004-2017. To do so, a panel threshold regression (PTR) has been used. Our results reveal that the estimated debt thresholds, as a percentage of GDP, are 78.40 for total public debt, 65.25 for external debt and 13.15 for domestic debt. Below these debt thresholds, the fiscal balance has a positive effect on the current account. The twin deficits hypothesis is therefore validated. However, beyond these debt thresholds, the fiscal balance has no significant effect on the current account; the twin deficits hypothesis is rejected.

Keywords: Current account; fiscal balance; public debt; Africa (search for similar items in EconPapers)
JEL-codes: F4 H6 (search for similar items in EconPapers)
Date: 2020-09-24
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Citations: View citations in EconPapers (1)

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