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Alberto Bagnai
''Twin deficits in CEEC economies: evidence from panel unit root tests''
( 2010, Vol. 30 No.2 )
This paper analyses the relation between the external and government deficits in a panel of CEEC economies. We first assess by panel unit root tests whether the fiscal and external intertemporal budget constraints hold, and then examine the role of public and private expenditure in the dynamics of external indebtedness by panel regression. The results show that government deficit is a significant but relatively minor source of external imbalances, and that the external indebtedness of CEEC economies is sustainable.
Keywords: current account, budget deficit, panel data, twin deficits, sustainability
JEL: F3 - International Finance: General
H6 - National Budget, Deficit, and Debt: General
Manuscript Received : Mar 12 2010 Manuscript Accepted : Apr 22 2010

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