An Empirical Investigation of Twin Deficits Hypothesis for Six Emerging Countries

13 Pages Posted: 17 Apr 2009

See all articles by Pinar Deniz

Pinar Deniz

Marmara University - Department of Economics

Sadullah Çelik

Marmara University FEAS Department of Economics

Date Written: April 17, 2009

Abstract

This paper aims to analyze Keynesian well-known twin deficits hypothesis for a group of emerging countries using quarterly data between 1996 and 2006. Twin deficits hypothesis argues that there is a positive relationship between budget deficit and trade deficit. Several papers have analyzed this relationship but reached no consensus on the existence of twin deficits. This study differing from traditional ones investigates the relationship by employing panel cointegration technique to six emerging markets. Our empirical results show that unlike studies employing traditional methods, twin deficits hypothesis is supported using advanced econometric techniques for the panel data.

Keywords: Twin Deficits, Emerging Markets, Panel Cointegration

JEL Classification: C33, F32, H62

Suggested Citation

Deniz, Pinar and Çelik, Sadullah, An Empirical Investigation of Twin Deficits Hypothesis for Six Emerging Countries (April 17, 2009). Available at SSRN: https://ssrn.com/abstract=1389242 or http://dx.doi.org/10.2139/ssrn.1389242

Pinar Deniz

Marmara University - Department of Economics ( email )

Istanbul
Turkey

HOME PAGE: http://https://sites.google.com/site/pinardenizresearch/

Sadullah Çelik (Contact Author)

Marmara University FEAS Department of Economics ( email )

Goztepe Campus
Istanbul
Turkey
+902163368487 (Phone)
+902163464356 (Fax)

HOME PAGE: http://posta.marmara.edu.tr/~scelik

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