CEEC vs. PIGS: a comparative panel assessment of financial sustainability and twin deficits

Alberto Bagnai

No 1088, Working Papers LuissLab from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: This paper analyses the relation between the external and government deficits in a panel of CEEC economies and, separately, in PIGS 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 the importance of private capital flows in the current external imbalances of European countries, with different implications for the two groups of countries considered.

Keywords: current account; budget deficit; panel data; twin deficits. (search for similar items in EconPapers)
JEL-codes: C53 F32 H62 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:lui:lleewp:1088

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