The twin deficit hypothesis: the case of Bulgaria
Gancho Todorov Ganchev
Additional contact information
Gancho Todorov Ganchev: South-West University, Blagoevgrad
Financial Theory and Practice, 2010, vol. 34, issue 4, 357-377
Recent developments in the Bulgarian economy bring into question the validity of the twin deficit hypothesis. This paper analyses the theoretical foundations of and alternative explanations for this hypothesis and uses different econometric approaches to test its validity on a sample of the Bulgarian data. A Granger causality test suggests the existence of dual causality between the fiscal and current account deficits. A vector autoregressive and a vector error correction model both reject the twin deficit hypothesis in the short run, but indicate that it might be valid in the long run.
Keywords: current account targeting; twin deficit hypothesis; Granger causality; vector autoregressive analysis; vector error correction (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
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:ipf:finteo:v:34:y:2010:i:4:p:357-377
Access Statistics for this article
More articles in Financial Theory and Practice from Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Martina Fabris ().