scholarly journals Republic of Kosovo

2021 ◽  
Vol 21 (41) ◽  
Author(s):  
Keyword(s):  
Current Account ◽  
Economic Activity ◽  
Current Account Deficit ◽  
International Travel ◽  
Policy Support ◽  
Fiscal Deficit ◽  
External Financing ◽  
Travel Restrictions ◽  
Containment Measures ◽  
Large Decline

Kosovo has been hit hard by the COVID-19 pandemic. Despite policy support, economic activity is estimated to have fallen 6 percent in 2020 on account of the combined effect of strict domestic containment measures and international travel restrictions. The fiscal deficit increased to 7.7 percent of GDP, given the large fall in tax revenues and the implementation of mitigation and recovery measures of 4.2 percent of GDP. The current account deficit is estimated to have increased to 7.5 percent of GDP mainly due to a large decline in diaspora-related inflows, most notably in tourism. Gross international reserves declined but remain adequate in part due to the purchase under the IMF’s Rapid Financing Instrument (RFI) in April 2020 and the use of other external financing. Banks have weathered the recession well to date, and the high pre-COVID19 liquidity levels and ample capital buffers bode well for the system’s stability.

scholarly journals Republic of Uzbekistan

2020 ◽  
Vol 20 (171) ◽  
Author(s):  
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Fiscal Deficit ◽  
External Financing ◽  
The Impact ◽  
Domestic Impact ◽  
The Current Account

The COVID-19 pandemic has severely impacted Uzbekistan. Growth is projected to slow to 1.5 percent in 2020, while lower exports and remittances are expected to widen the current account deficit to almost 10 percent of GDP. Addressing the external shock and the domestic impact of COVID-19 is expected to require additional external financing of about US$ 4 billion (7 percent of GDP). At the same time, weaker than expected revenues and additional crisis-related expenditures are expected to widen the fiscal deficit from near balance to about 4 percent of GDP. Uncertainty about the severity and length of the global downturn and the impact on Uzbekistan’s economy is large.

scholarly journals Explaining India’s current account deficit: a time series perspective

2019 ◽  
Vol 26 (1) ◽  
pp. 117-138
Author(s):  
Harendra Kumar Behera ◽  
Inder Sekhar Yadav
Keyword(s):  
Current Account ◽  
Unit Root ◽  
Current Account Deficit ◽  
Structural Break ◽  
Current Account Balance ◽  
Fiscal Deficit ◽  
Causality Test ◽  
Content Type ◽  
Financial Account ◽  
Cointegration Tests

Purpose The purpose of this paper is to examine the issue of high current account deficit (CAD) from various perspectives focussing its behaviour, financing pattern and sustainability for India. Design/methodology/approach To begin with the trends, composition and dynamics of CAD for India are analysed. Next, the influence of capital flows on current account is investigated using Granger non-causality test proposed by Toda and Yamamoto (1995) between current account balance (CAB) to GDP ratio and financial account balance to GDP ratio. Also, the sustainability of India’s current account is examined using different econometrics techniques. In particular, Husted’s (1992), Johansen’s cointegration and vector error correction model (VECM) is applied along with conducting unit root and structural break tests wherever applicable. Further, long-run and short-run determinants of the CAB are estimated using Johansen’s VECM. Findings The study found that the widening of CAD is due to fall in household financial savings and corporate investments. Also, it was found that a large part of India’s CAD has been financed by FDI and portfolio investments which are partly replaced by short-term volatile flows. The unit root and cointegration tests indicate a sustainable current account for India. Further, econometric analysis reveals that India’s current account is driven by fiscal deficit, terms of trade growth, inflation, real deposit rate, trade openness, relative income growth and the age dependency factor. Practical implications Since India’s CAD has widened and is expected to widen primarily due to rise in gold and oil imports, policy makers should focus on achieving phenomenal export growth so that a sustainable current account is maintained. Also, with rising working-age and skilled population, India should focus more on high-value product exports rather than low-value manufactured items. Further, on the structural side it is important to correct fiscal deficit as it is one of the important factors contributing to large CAD. Originality/value The paper is an important empirical contribution towards explaining India’s CAD over time using latest and comprehensive data and econometric models.

Asymmetric Effect of Fiscal Deficit on Current Account Deficit: Evidence from India

2021 ◽  
pp. 097226292110572
Author(s):  
Vishal Sharma ◽  
Masudul Hasan Adil ◽  
Sana Fatima ◽  
Ashok Mittal
Keyword(s):  
Current Account ◽  
Positive Impact ◽  
Current Account Deficit ◽  
Fiscal Deficit ◽  
Asymmetric Effect ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Asymmetric Impact ◽  
The Impact

This study has attempted to re-investigate the impact of fiscal deficit (FD) on current account deficit (CAD) (also known as twin deficit hypothesis) in India from 1970–1971 to 2018–2019 in the presence of private saving–investment gap (SI) and exchange rate (EXR). For the empirical investigation, the study has employed the nonlinear autoregressive distributed lag (NARDL) approach to cointegration. The NARDL results found the evidence of an asymmetric effect of FD, SI and EXR on CAD in the long run only. The obtained results support the traditional views of the Keynesian approach that FD has a positive impact on CAD, validates the existence of the ‘Twin Deficit Hypothesis’ in India. Further, results also depict that SI has a positive effect on CAD, whereas EXR has an adverse impact on CAD. From a policy standpoint, the asymmetric impact of FD on CAD provides strong reasons for conceiving policies that are adaptable to changing dynamics in internal as well as external sectors.

Twin deficits hypothesis in Bangladesh: an empirical investigation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sima Rani Dey ◽  
Mohammad Tareque
Keyword(s):  
Current Account ◽  
Budget Deficit ◽  
Good Governance ◽  
Current Account Deficit ◽  
Trade Deficit ◽  
Fiscal Deficit ◽  
Twin Deficits ◽  
Content Type ◽  
Long Run ◽  
The Current Account

PurposeThis study attempts to examine the twin deficits hypothesis for Bangladesh. Along with the traditional twin deficits hypothesis associated with the current account and fiscal deficit, the paper also explores the causal relationship between the trade deficit and fiscal deficit.Design/methodology/approachWe start with the investigation of the conventional twin deficit hypothesis employing autoregressive distributed lag (ARDL) bounds testing approach in a multivariate framework. Due to the absence of cointegration between the budget deficit and trade deficit, the study adopts a multivariate vector autoregressive (VAR) model to analyze the nexus.FindingsThe study supports the presence of the twin deficits hypothesis in Bangladesh, both in the short run and long run. Unidirectional causation running from the budget deficit to the current account deficit in the long run. The trade model also supports the twin deficit hypothesis, like the aforementioned current account model.Practical implicationsTherefore, the sustainable fiscal deficit is the key to maintain a stable current account deficit and trade deficit in Bangladesh.Originality/valueThe study incorporates the country risk indicators to address the governance issue while analyzing the models' deficit scenarios because good governance is an integral part of explaining the development outcome and failure of a country like Bangladesh.

scholarly journals Testing the Validity of the Triple Deficit Hypothesis for Nigeria

2019 ◽  
Vol 4 (2) ◽  
pp. 89-109
Author(s):  
Rahman Olanrewaju Raji
Keyword(s):  
Causal Relationship ◽  
Current Account ◽  
Current Account Deficit ◽  
Fiscal Deficit ◽  
Discipline Policy ◽  
Export Sector ◽  
Long Run ◽  
Financial Account ◽  
Omission Bias ◽  
External Sector

This paper tests the validity of the triple deficit hypothesis in Nigeria by examining the causal relationship among current account deficit, financial account deficit, and fiscal deficit within a five-variate ARDL framework complemented with GMM framework for the period 2008-2017 using quarterly data. The paper obviates the variable omission bias that characterizes most existing studies. The ARDL-bound testing technique confirms that there is the presence of a long-run bi-causal relationship between current account and financial account deficits in Nigeria. The results based on the model and empirical outputs suggest that authorities of this economy must put in place a fully fiscal and monetary discipline policy that should ensure the drastic curtailment of fiscal deficit and create a conducive environment to attract foreign remittances and foreign investment, which would help to generate healthy external balances. In addition, exchange rate stability can promote the export sector and minimize external imbalances through creating critical surpluses in current accounts, including related comprehensive discipline policies that may be pursued, which enable the external sector, financial and fiscal sectors, and monetary sector to perform without creating adverse imbalances in this economy.

scholarly journals The effect of fiscal deficits on the external imbalances in the European Union

2020 ◽  
pp. 17-17
Author(s):  
Kosta Josifidis ◽  
Dragutinovic Mitrovic ◽  
Sladjana Bodor
Keyword(s):  
European Union ◽  
Current Account ◽  
Current Account Deficit ◽  
Fiscal Deficit ◽  
The European Union ◽  
External Imbalances ◽  
Econometric Methods ◽  
Long Run ◽  
The Impact ◽  
The Current Account

This paper analyzes the effect of the fiscal deficit on the current account deficit in the European Union during the period 1995-2018. The purpose is to examine to what extent an increase in government spending affects the deterioration of terms of trade and contributes to increasing external imbalances. Econometric methods for heterogeneous panel data models are used to analyse the existence of a long-run relationship between the fiscal deficit and the current account. The empirical findings indicate that the twin deficits hypothesis is not confirmed for the whole European Union, but only for a certain number of member states, where a long-run relationship still exists, confirming the impact of the fiscal deficit on the current account.

scholarly journals Gabon

2018 ◽  
Vol 19 (269) ◽  
Author(s):  
Keyword(s):  
Current Account ◽  
Program Implementation ◽  
Current Account Deficit ◽  
Public Investment ◽  
Fiscal Deficit ◽  
Fiscal Consolidation ◽  
Macroeconomic Conditions ◽  
Oil Revenues ◽  
Cash Basis

While external buffers are being rebuilt, the CEMAC’s recovery remains fragile. In Gabon, macroeconomic conditions are slowly improving. Activity is stabilizing, with 2017 growth revised to 0.5 percent—a slowdown broadly in line with trends envisaged at the time of the program request a year ago. Oil and mining exports helped narrow the 2017 current account deficit. The overall fiscal deficit (cash basis) declined by 3¼ percent of GDP, but the adjustment relied on large cuts in public investment. Weak program implementation contributed to the underperformance of non-oil revenues and overruns on current spending. Fiscal slippages aggravated already significant cashflow pressures, contributing to the authorities’ failure to clear all external arrears at end 2017. The authorities recently announced a strong package of fiscal consolidation measures.

‘Twin Deficits’ Hypothesis

2016 ◽  
Vol 52 (1) ◽  
pp. 15-29 ◽  
Author(s):  
Anantha Ramu M.R.
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Positive Association ◽  
Correction Method ◽  
Structural Var ◽  
Annual Data ◽  
Fiscal Deficit ◽  
Twin Deficits ◽  
Indian Economy

Higher and persistent level of fiscal deficit and current account deficit is the problem of the day for Indian economy. There exists an argument that higher fiscal deficit is the major factor behind worsening balance of payments position. However, there is no identical perception on the relationship between fiscal deficit and current account deficit both theoretically and empirically. Hence this article is a revisit to the existing debate to see whether fiscal deficit and current account deficit can be called as ‘twin deficits’ pertaining mainly to Indian economy. Using long-term annual data for the period 1980–1981 to 2012–2013 on Indian economy and using vector error correction method, this article seeks to prove that there exists long-term positive association between fiscal deficit and current account deficit, and hence can be called as ‘twins’. Using structural VAR method it has been proved here that fiscal deficit is in line with the pattern illustrated in Keynesian absorption theory and Mundell–Fleming model in regard to its impact on current account deficit. This article negates the relevance of Ricardian equivalence theory in Indian context.

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