Current account dynamics and expected future budget deficits: some international evidence

Testing the Validity of the Triplet Deficit Hypothesis for Turkey: Asymmetric Causality Analysis

“…Studies focusing on current account deficits and budget deficits have obtained a variety of results. Prover findings to traditional opinion have been obtained in numerous studies (Bernheim, 1988;Zietz and Pemberton, 1990;Biswas et al, 1992;Rosensweig and Tallman, 1993;Dibooglu, 1997;Egwaikhide, 1999;Khalid and Guan, 1999;Vamvoukas, 1999;Piersanti, 2000;Kulkarni and Erickson, 2001;Leachman and Francis, 2002;Fidrmuc, 2003;Kouassi et al, 2004;Pattichis, 2004;Corsetti and Müller, 2006;Salvatore, 2006;Mukhtar et al, 2007;Lau and Tang, 2009;Ito, 2009;Ganchev, 2010;Holmes, 2011;Iram et al, 2011;Zamanzadeh and Mehrara, 2011;Kalou and Paleologou, 2012;Trachanas and Katrakilidis, 2013). These studies have emphasized that budget deficits have a major impact on current account deficits.…”

Internal Deficit–External Deficit Nexus in Africa: 1960-2012

“…A related literature shows that studies such as Hutchison and Pigott (1984), Zietz and Pemberton (1990), Bachman (1992), Vamvoukas (1999), Piersanti (2000), and Leachman and Francis (2002) without a doubt establish that internal deficit provokes an increase in foreign accounts deficits. In spite of this, analysis from Baharumshah and Lau (2007) indicate a uni-directional causal model from internal deficit to external deficit in Thailand.…”

Causality Test of Budget and Current Account Deficits in Nigeria: Evidence from Toda and Yamamoto Modified Wald Analysis

“…The strength and direction of causality between fiscal deficit and current account balance has been extensively investigated in previous studies using the conventional granger causality framework (Islam, 1998;Piersanti, 2000;Gancho, 2010;Saeed and Khan, 2012;Mandishekwa, Tambudzai and Marufu, 2014). The granger causality test is a statistical hypothesis test for determining whether one variable is useful in forecasting another.…”

“…Piersanti (2000) employed the Granger-Sims causality technique to examine the relationship between the current account deficit and budget deficits for seventeen OECD countries for the period 1970 -1997. The results revealed that there is strong evidence to support the view that current account deficits have been associated with large budget deficits during the period being investigated in most industrial countries.…”