Threshold cointegration and the short-run dynamics of twin deficit hypothesis in African countries
Ahmad Hassan Ahmad,
Olalekan Bashir Aworinde and
Christopher Martin ()
The Journal of Economic Asymmetries, 2015, vol. 12, issue 2, 80-91
This paper examines the relationship between the fiscal deficit and the current account deficit using the threshold cointegration approach of Hansen and Seo (2002). Using quarterly data for nine African countries for the period 1980–2009, a long-run positive cointegrating relationship is established for six out of the nine countries examined, while the relationship is negative for the other three. This provides qualified support for the twin convergence hypothesis. Threshold error correction effects show some diversity in the speed of adjustment of the current account relative to the speed of adjustment of the fiscal deficit. This may be a reflection of differences in the way fiscal policy issues are handled across the countries.
Keywords: Fiscal deficits; Current account deficits; Threshold cointegration; African countries (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:12:y:2015:i:2:p:80-91
Access Statistics for this article
The Journal of Economic Asymmetries is currently edited by A.G. Malliaris
More articles in The Journal of Economic Asymmetries from Elsevier
Bibliographic data for series maintained by Catherine Liu ().