Twin Deficits or Ricardian Equivalence? Empirical Evidence in the APEC Countries

Cosimo Magazzino ()

Asian Economic and Financial Review, 2017, vol. 7, issue 10, 959-971

Abstract: The paper analyses the relationship between trade balance and government budget for the APEC countries over the 1980-2013 years. Using a panel data techniques, a 2-variable VAR is estimated. Empirical findings show that for the whole APEC members as well as for the ASEAN sub-sample a bi-directional causality is discovered, while for the American sub-sample the Neo-classical view holds. Moreover, the forecast errors decompositions seem confirm this analysis. Cointegration tests reveal the existence of a long-run relationship between these two variables, with most of the coefficients close to 1, although several ASEAN countries represent exceptions. Finally, causality analyses show that ten countries exhibit the absence of any causal relationship, in line with neutrality Ricardian hypothesis.

Keywords: Twin deficits; Ricardian equivalence; Trade balance; Public deficit; APEC; Panel data. (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://archive.aessweb.com/index.php/5002/article/view/1609/2348 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:7:y:2017:i:10:p:959-971:id:1609

Access Statistics for this article

More articles in Asian Economic and Financial Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().