ХИПОТЕЗАТА ЗА ДВОЙНИЯ ДЕФИЦИТ – УСЛОВНО ПРОЯВЛЕНИЕ ИЛИ УНИВЕРСАЛНА ЗНАЧИМОСТ
TWIN DEFICIT HYPOTHESIS - CONDITIONAL OR UNIVERSAL SIGNIFICANCE

Author(s): Gancho Ganchev, Vladimir Tsenkov, Maria Panova
Subject(s): Economy, Public Finances
Published by: Икономически университет - Варна
Keywords: current account balance; government budget balance; twin deficit hypothesis; panel regression; G-8; G-20; Eurozone; countries with currency board; OPEC member countries
Summary/Abstract: The validity of the Tween Deficit Hypothesis (TDH) is tested based on the use of panel data from 188 countries and the use of least squares panel regression. Although the hypothesis presumes a universalism of its application, the empirical results indicate the presence of characteristic groupings of countries. The division is based both on the rejection or acceptance of the hypothesis, as well as on the magnitude and influence of country-specific factors directly influencing the relationship between current account and government budget balances. The empirical data clearly shows the deafferentation of the studied countries based on the level of economic development, as well as based on petrol and manufacturing oriented export countries. Another interesting finding is the fact that countries with a currency board demonstrate the clearest rejection of the TDH between all of the studied countriesThe validity of the Tween Deficit Hypothesis (TDH) is tested based on the use of panel data from 188 countries and the use of least squares panel regression. Although the hypothesis presumes a universalism of its application, the empirical results indicate the presence of characteristic groupings of countries. The division is based both on the rejection or acceptance of the hypothesis, as well as on the magnitude and influence of country-specific factors directly influencing the relationship between current account and government budget balances. The empirical data clearly shows the deafferentation of the studied countries based on the level of economic development, as well as based on petrol and manufacturing oriented export countries. Another interesting finding is the fact that countries with a currency board demonstrate the clearest rejection of the TDH between all of the studied countries. Key words: current account balance, government budget balance, twin deficit hypothesis, panel regression, G-8, G-20, Eurozone, countries with currency board, OPEC member countries.

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