Triple Deficit or Twin Divergence: A Dynamic Panel Analysis

Year 2016, Volume: 12 Issue: 1, 271 - 280, 30.04.2016

Hilmi Çoban , Eda Balıkçıoğlu

Abstract

Triple deficit hypothesis points out coexistence of budget deficit,
current account deficit and private-savings deficits. In the literature,
in terms of Keynesian and Ricardian approach, existing of budget
deficit and current account deficit and the relationship between them
are widely examined. The literature on three deficits which develops
twin deficit hypothesis by involving private sector saving gaps is
limited. Moreover, the problems about political economy of three
deficits that occur with fragility of transition economies lay on rather
wide area. Our study aims to examine three deficit hypothesis for 24
transition economies over 2002-2013 period by employing dynamic panel
data analysis. We find evidence of an interaction between current
account deficit and savings-investment deficit.

Keywords

Triple Deficit or Twin Divergence: A Dynamic Panel Analysis

References

• ...