Twin deficits in CEEC economies: evidence from panel unit root tests

Alberto Bagnai

Economics Bulletin, 2010, vol. 30, issue 2, 1071-1081

Abstract: This paper analyses the relation between the external and government deficits in a panel of CEEC economies. We first assess by panel unit root tests whether the fiscal and external intertemporal budget constraints hold, and then examine the role of public and private expenditure in the dynamics of external indebtedness by panel regression. The results show that government deficit is a significant but relatively minor source of external imbalances, and that the external indebtedness of CEEC economies is sustainable.

Keywords: current account; budget deficit; panel data; twin deficits; sustainability (search for similar items in EconPapers)
JEL-codes: F3 H6 (search for similar items in EconPapers)
Date: 2010-04-22
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Citations: View citations in EconPapers (5)

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