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Idrys Fransmel Okombi
''Twin Deficits in Sub-Saharan African Countries: Evidence through debt''
( 2020, Vol. 40 No.3 )
This article tests the twin deficits hypothesis using different debt regimes with a panel of 30 African countries over the period 2004-2017. To do so, a panel threshold regression (PTR) has been used. Our results reveal that the estimated debt thresholds, as a percentage of GDP, are 78.40 for total public debt, 65.25 for external debt and 13.15 for domestic debt. Below these debt thresholds, the fiscal balance has a positive effect on the current account. The twin deficits hypothesis is therefore validated. However, beyond these debt thresholds, the fiscal balance has no significant effect on the current account; the twin deficits hypothesis is rejected.
Keywords: Current account, fiscal balance, public debt, Africa
JEL: H6 - National Budget, Deficit, and Debt: General
F4 - Macroeconomic Aspects of International Trade and Finance: General
Manuscript Received : Jan 18 2020 Manuscript Accepted : Sep 24 2020

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