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25.2 The twin deficits hypothesis

Twin deficits hypothesis - Wikipedia

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Revisiting the Twin Deficits Hypothesis ..

In Chapter 21, we considered the current account. At its most basic, the twin deficits hypothesis says that there is a relationship between the budget balance and the current account balance.

Talk:Twin deficits hypothesis - Wikipedia

They also argue that there is a strong and direct relationship between the national economy’s current account balance and its government budget balance and can become twinned” – that is, move together dollar-for-dollar. This is the twin deficit hypothesis.

The twin deficits hypothesis: Revisiting an EMU country

Twin Deficits Hypothesis | Stavros Mavroudeas Blog

The twin deficits hypothesis thus relies on a direct link between budget deficits and current account deficits, which is considered to lead to undesirable consequences.

As we will see there are a number of conceptual and empirical difficulties with the view outlined above. We will see that the “twin deficits” hypothesis is based on a particular causality – budget deficits to external deficits – which may be reversed in reality.

Posts about Twin Deficits Hypothesis written by Stavros Mavroudeas

Investigating for Twin Deficits Hypothesis in South …

This framework can be used to demonstrate the accounting basics of twin deficits hypothesis. At the macroeconomic level, the final expenditure components of aggregate demand are consumption (C), investment (I), government spending (G), and net exports (exports minus imports) (X – M).

We will show in this section that a currency-issuing government that floats its currency has more domestic policy space to work within that is reflected in the twin deficits hypothesis. We will show that the government can make use of this space to pursue economic growth and increased living standards even if this means expansion of the current account deficit and depreciation of the currency.

Twin Deficits Hypothesis in SEACEN Countries: A ..
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    Twin Deficit Hypothesis

  • An Econometric Analysis of the Twin Deficits Hypothesis …

    TESTING THE TWIN DEFICIT HYPOTHESIS: THE CASE OF CENTRAL AND EASTERN EUROPEAN COUNTRIES Ganchev G., Tsenkov V., …

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    Twin deficits hypothesis This page was last edited on 19 May 2017, at 17:44

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Testing Twin Deficits Hypothesis in Iran

Our findings, based on panel data analysis under cross-sectional dependence and country-specific heterogeneity, support neither the twin deficits hypothesis nor its extended version, the triple deficits hypothesis, for any of the countries considered.

Assessing the Twin Deficits Hypothesis in Selected …

The Twin Deficits Hypothesis imputes a strict causality between the sectoral flows where the private sector savings and investment gap is zero or stable, and changes in the budget deficit translate directly into current account deficit.

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