Budget deficit persistence and the twin deficits hypothesis

• 成果类型: Article
• 署名作者: Normandin, M
• 署名单位: University of Quebec; University of Quebec Montreal; University of Quebec; University of Quebec Montreal
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(98)00058-0
• 发表日期: 1999
• 页码: 171-193
• 关键词: birth rate; Budget deficit; external deficit; ricardian equivalence

摘要

This paper gauges the twin deficits hypothesis, i.e. a positive causal relationship between the external and budget deficits. This relationship is measured by the responses of the external deficit to changes in the budget deficit induced by Blanchard's model. These responses are positively affected by the birth rate and by the degree of persistence of the budget deficit. Empirical results for the Canadian and US economies reveal that, although the relevant birth rates are small, the great persistence of the budget deficits yields responses that are numerically large and statistically positive. This contrasts with previous tests of the twin deficits hypothesis, which have never formally taken into account the stochastic properties of the budget deficit. (C) 1999 Elsevier Science B.V. All rights reserved.