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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26626
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| Title: | | Bootstrap panel granger-causality between government budget and external deficits for the EU  |
| Authors: | | Afonso, António Rault, Christophe |
| Issue Date: | | 2009 |
| Series/Report no.: | | CESifo working paper 2581 |
| Abstract: | | 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. |
| Subjects: | | Panel causality tests budget deficit external imbalance real exchange rates EU OECD |
| JEL: | | C23 E62 F32 H62 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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