The effect of fiscal deficits on the external imbalances in the European Union

Josifidis, Kosta; Dragutinović-Mitrović, Radmila; Bodor, Sladjana

doi:10.2298/pan190523017j

Cited by 4 publications

(1 citation statement)

References 41 publications

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“…However, over time this theory has generated many versions. This theory asserts that the CAD is sustainable when it will satisfy long run inter-temporal constraints despite not disturbing any policy shifts (Josifidis et al, 2021). This approach stresses the expected values of savings and investment.…”

Section: Net International Debt To Gdpmentioning

confidence: 99%

Modelling the determinants and Sustainability of Current Account of Pakistan

Ahmed,

Jawaid,

Tabasam

et al. 2023

Zagreb International Review of Economics and Business

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The study investigated the determinants of the current account deficit from 1976 to 2020 for the economy of Pakistan, and its sustainability. The persistent deficit is necessary to be sustainable if it will be paid off shortly otherwise it will pile up external debt. The conventional methodology concluded that current account deficit (CAD) of Pakistan is unsustainable, albeit one measure suggests sustainability. There is cointegration among variables and domestic saving, external debt, fiscal deficit and trade deficit has positive whereas exchange rate and worker’s remittances have a negative relation with the current account, all the results are significant. The negative sign of the error correction term confirms restoration of equilibrium and it is also significant. Bidirectional causality is reported between the worker’s remittances, exchange rate and external debt with CAD. Unidirectional causality is seen from CAD to trade deficit and fiscal deficit. The diagnostic tests of the model confirm robustness. The government should favour an investment-friendly environment to increase economic activity in the country besides improving domestic savings and reducing the external deficit.

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Section: Net International Debt To Gdpmentioning

confidence: 99%

Modelling the determinants and Sustainability of Current Account of Pakistan

Ahmed,

Jawaid,

Tabasam

et al. 2023

Zagreb International Review of Economics and Business

View full text Add to dashboard Cite

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The threshold effect of public debt on the twin imbalances: Evidence from MENA countries

Bousnina

Gabsi

2022

The Journal of International Trade & Economic Development

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The Relationship Between Current Account Deficit and CBRT Policy Rates After the 2008 Crisis: ARDL and NARDL Bounds Test Approach

Sümer,

Peker

2024

Hacettepe Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi

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The current account deficit has continued as a constant problem due to the structural problems of the Turkish economy and the impact of the tightening monetary policy decisions taken after the 2008 global crisis. For this reason, measures regarding the current account deficit are among the priority agenda items of the CBRT. The aim of this study is to examine the relationship between the current account deficit and the policy interest rate in the inflation targeting and floating exchange rate system using the ARDL bounds test method in the period 2011:Q1-2023:Q1. Cointegration results confirm the existence of a long-term relationship between the variables. Long and short term coefficients show that the policy rate does not have a significant effect on the current account deficit.The findings indicate that the expected impact of policy rate adjustments on the current account deficit is limited. It is thought that this situation arises from the fact that the reaction of the exchange rate to the policy interest is more decisive in inflation targeting than the reaction of the current account deficit. Therefore, keeping the current account deficit at a sustainable level will depend on exchange rate stability.

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The effect of fiscal deficits on the external imbalances in the European Union

Cited by 4 publications

References 41 publications

Modelling the determinants and Sustainability of Current Account of Pakistan

Modelling the determinants and Sustainability of Current Account of Pakistan

The threshold effect of public debt on the twin imbalances: Evidence from MENA countries

The Relationship Between Current Account Deficit and CBRT Policy Rates After the 2008 Crisis: ARDL and NARDL Bounds Test Approach

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