Fiscal and current account imbalances: The cases of Germany and Portugal
António Afonso,
José Carlos Coelho
Abstract:We investigate the bilateral relationship between government budget balances and current account balances for Germany and Portugal. We find that the response of the current account balance to the budget balance is greater in Portugal than in Germany. On the other hand, the response of the budget balance to the current balance is higher in Germany than in Portugal. In Germany and Portugal, a fiscal rules index has a negative impact on the current account balance and the government effectiveness index has a posi… Show more
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