BUDGET BALANCE AND TRADE BALANCE:KIN OR STRANGERS. A CASE STUDY OF TAIWAN

Hsiao-chuan Chang

No 893, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: In line with the deterioration of Taiwanese budget deficits, the trade surplus has also decreased. It is the ideal time to investigate the relationship between budget balances and trade balances. Unit root tests, cointegration tests, Granger causality tests and the VARs model are techniques used to test the Keynesian proposition and the Ricardian equivalence. The main findings are that Keynesian proposition is supported only by the model using data of the whole period. There is no support for the Ricardian equivalence. That budget balances and trade balances being kin or strangers varies over periods of data used.

Keywords: Keynesian proposition; Ricardian equivalence; unit root tests; Grangercausality tests; VARs model (search for similar items in EconPapers)
JEL-codes: C32 H50 H62 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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