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The Twin Deficits Phenomenon in Some MENA Countries

Ali Hossein Samadi ()
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Ali Hossein Samadi: Instructor of Economics, Shiraz University, And PhD Student of economics in Isfahan University

Iranian Economic Review (IER), 2006, vol. 11, issue 2, 129-140

Abstract: The main purpose of this paper is analyses the short and long run relationship between budget deficit and trade deficit in some MENA countries. The data cover the period from 1971-2000 (and for I.R. IRAN 1959-2003).The relationship between these variables will be analyses in short and long run by using Johansen co-integration tests, ECM, and Granger causality test. The empirical evidence provides support to the view of Ricardian Equivalence in Iran (Islamic Rep.), Jordan, Kuwait, Morocco, Oman, and Tunisia. But, the empirical evidence proves the validity of Keynesian proposition (conventional view) only Egypt, Bahrain, Oman, and Turkey.

Keywords: Budget deficit; trade deficit; twin deficit; Granger causality test; Johansen co-integration technique; Keynesian proposition (conventional view); Ricardian Equivalence hypothesis (search for similar items in EconPapers)
Date: 2006
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Handle: RePEc:eut:journl:v:11:y:2006:i:2:p:129