Twin deficit in MENA countries: an empirical investigation

Twin deficit in MENA countries: an empirical investigation

This paper tests the relationship between current account and budget deficits in eight MENA countries using time-series data for the period 1990-2012. The paper uses cointegration analysis, error correction modelling and Granger causality test under a vector autoregression framework. The...

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Bibliographic Details
Main Author: Samia OMRANE BELGUITH
Format: Article
Language:English
Published: Editura ASE Bucuresti 2016-06-01
Series:Romanian Economic Journal
Subjects:
Twin deficit
fiscal deficit
current account deficit
Granger Causality
Online Access:http://www.rejournal.eu/article/twin-deficit-mena-countries-empirical-investigation
Description
Summary:This paper tests the relationship between current account and budget deficits in eight MENA countries using time-series data for the period 1990-2012. The paper uses cointegration analysis, error correction modelling and Granger causality test under a vector autoregression framework. The results show that the direction of causality for the MENA countries is mixed. The findings confirm that current account deficit causes budget deficit for Kuwait and Egypt, whereas the reverse causality is true for Saudi Arabia supporting the twin deficit hypothesis. The results show also that there is no relationship between two deficits for other countries supporting Ricadian equivalence hypothesis (REH).
ISSN:1454-4296
2286-2056

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