Resource title

Bootstrap panel granger-causality between government budget and external deficits for the EU

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Resource description

We investigate the existence of Granger-causality between current account and government budget balances over the period 1970-2007, for different EU and OECD country groupings. We use the panel-data approach of Kónya (2006), which is based on SUR systems and Wald tests with country specific bootstrap critical values. Our results show a causal relation from budget deficits to current account deficits for several EU countries: Bulgaria, Czech Republic, Estonia, Finland, France, Italy, Hungary, Lithuania, Poland, and Slovakia, along the lines of the so-called twin-deficit relationship. Considering the effective real exchange rate in the SUR system does not substantially alter the results.

Resource author

António Afonso, Christophe Rault

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Resource publish date

Resource language

eng

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text/html

Resource resource URL

http://hdl.handle.net/10419/26626

Resource license

Adapt according to the presented license agreement and reference the original author.