The twin deficits phenomenon: evidence from Greece

Abstract

This paper explores the relationship between budget and trade deficits in a small open economy using annual data. The purpose of the paper is to test empirically the validity and rationale of the Keynesian proposition (conventional view) and the Ricardian equivalence hypothesis. The econometric methodology is based on cointegration analysis, error-correction modelling and Granger trivariate causality. The ECM empirical findings suggest that budget deficit has short- and long-run positive and significant causal effects on trade deficit.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 141 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.