Causality tests of the relationship between the twin deficits

Eugene Kouassi (), Mbodja Mougoue and Kern O. Kymn ()

Empirical Economics, 2004, vol. 29, issue 3, 503-525

Abstract: We re-examine the causality between the twin deficits by testing for Granger non-causality between BD and CAD based on extended causality tests initially developed by Toda and Yamamoto (1995). Using international data from a sample of twenty developed and developing countries, we find evidence of causality (unidirectional or bi-directional) between the twin deficits for some developing countries. However, the results for developed countries are less persuasive. The empirical findings of this study are robust to alternative and independent causality testing procedures. Copyright Springer-Verlag 2004

Keywords: Granger non-causality; likelihood ratio; wald; and Lagrange multiplier tests; alternative tests; twin deficits; international evidence; C20; C22 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (48)

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DOI: 10.1007/s00181-003-0181-5

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