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, Grangercausality tests show a unidirectional flow from trade deficits to budget deficits, in line with Neo-classical view.
Jel Code:
F32, E62, H62
Article Details
- Year: 2012
- Volume: 33
- Issue: 3
- Pages: 65 - 80
- Accepted: 30.05.2012
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DOI:
https://doi.org/10.5281/zenodo.21078389 -
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How to Cite?
Cosimo Magazzino (2012). The Twin Deficits Phenomenon: Evidence from Italy. Journal of Economic Cooperation and Development, 33(3), 65-80. https://doi.org/10.5281/zenodo.21078389
