Using time series techniques, this study explores the relationship between trade deficits and budget deficits in Italy in the period 1970-2010. Empirical findings show that current account balance and government budget are I(1) processes. Cointegration tests reject the presence of a long-run relationship between these variables. Finally, Granger-causality tests show a unidirectional flow from trade deficits to budget deficits, in line with Neo-classical view.

MAGAZZINO C (2012). The Twin Deficits phenomenon: evidence from Italy. JOURNAL OF ECONOMIC COOPERATION AND DEVELOPMENT, 33(3), 65-80.

The Twin Deficits phenomenon: evidence from Italy

MAGAZZINO, COSIMO
2012

Abstract

Using time series techniques, this study explores the relationship between trade deficits and budget deficits in Italy in the period 1970-2010. Empirical findings show that current account balance and government budget are I(1) processes. Cointegration tests reject the presence of a long-run relationship between these variables. Finally, Granger-causality tests show a unidirectional flow from trade deficits to budget deficits, in line with Neo-classical view.
MAGAZZINO C (2012). The Twin Deficits phenomenon: evidence from Italy. JOURNAL OF ECONOMIC COOPERATION AND DEVELOPMENT, 33(3), 65-80.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11590/138267
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