Are the twin or triple deficits hypotheses applicable to post-communist countries?

Abstract

This study examines the validity of the twin or triple deficits hypotheses using bootstrap panel Granger causality analysis and an annual panel dataset of six postcommunist countries (Russia, Poland, Ukraine, Romania, the Czech Republic, and Hungary) during the period from 1994 to 2015. The results corroborate neither the validity of the twin deficits hypothesis nor its extended version, the triple deficits hypothesis, for any of the sample countries. In other words, we find no Granger causal relationship between budget deficits and external (trade or current account) deficits or among budget deficits, private savings-investment deficits, and external deficits in the countries examined. On the basis of these results, we reject the Keynesian view of the twin or triple deficits hypotheses. Rather, we confirm the Ricardian view.

Testing the triple deficit hypothesis for sub‐Saharan Africa: Implications for the African Continental Free Trade Area

“…The results obtained above confirm the existence of the TDH in SSA given the identified directions of causality. Findings in this study were also in harmony with the findings of Bolat et al (2014), Akbas and Lebe (2016), Shastri et al (2017), amongst others, but were contrary to the studies of Çoban and Balikçioğlu (2016), Şen and Kaya (2018) and Magoti et al (2020). This means that a budget deficit arising from excessive government expenditure over revenue may cause a current account deficit through excess foreign borrowing to finance the deficit that comes with external capital inflows, leading to a revaluation of the domestic currency, and through an increase in import-led consumption expenditure occasioned by the increase in aggregate demand.…”

“…Özdemir et al (2014) assessed the validity of the TDH in 17 transition economies between 2003 and 2011 and the study provided evidence supporting the Ricardian Equivalence Hypothesis and invalidates the TDH. Similarly, Şen and Kaya (2018) conclude that the TDH is not valid for six post-communist nations over the period 1994-2012. In a group of 15 developing nations from 2000 to 2015, Bayramoğlu and Öztürk (2018) found a significant connection between current account and domestic savings whereas causal linkages between current account balance and fixed capital investments cannot be established; hence the study concluded that TDH is partially valid for the selected developing economies studied. Raouf (2020) examined the validity of TDH for a group of 14 Middle Eastern and Northern African (MENA) nations from 1999 to 2018.…”

Üçüz Açik Hi̇potezi̇ni̇n Geçerli̇li̇ği̇ne İli̇şki̇n Panel Veri̇ Anali̇zi̇

“…Basit Keynesyen modeldeki açık ekonomideki milli gelir dengesi ikiz ve üçüz açık hipotezlerinin teorik altyapısının başlangıç noktasıdır (Şen & Kaya, 2016). Modelde açık ekonomide t dönemi için GSYİH (1) numaralı denklemde ifade edilmiştir:…”

“…Tablo 1, ülke grubu özelinde yapılan çalışmaları göstermektedir. Tablo 1'de de görüldüğü üzere, Şen & Kaya (2016), Çoban & Balıkçıoğlu (2016Çoban & Balıkçıoğlu ( ), Özdemir vd. (2014 tarafından yapılan ampirik çalışmalarda üçüz açık hipotezinin geçerli olmadığı sonucuna ulaşılırken, Balan (2016) çalışmasında BRIC ülkelerinde cari açık üzerinde bütçe açığı ve tasarruf açığı etkili olduğu ancak MINT ülkelerinde tasarruf açığı ve cari açık arasında ve tasarruf açığı ile bütçe açığı arasında tek yönlü nedensellik ilişkisine rastlamıştır.…”