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Cointegration Evidences From The New Fragile Five

Author

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  • Gülgün ÇİĞDEM

    (Ä°stanbul GeliÅŸim University)

  • Merve ALTAYLAR

    (Dokuz Eylül University)

Abstract

Purpose of this study is to test the association between savings and current account deficit of the “New Fragile Five†falling into critical cycle. 1994-2019 period annual national savings, current account balance and external debt have been analyzed within the framework of panel data analysis. At the modeling stage of the research focused on the cointegration relationship. Panel cointegration tests with structural breaks based on LM were used. To examine the unique economic structures of countries, heterogeneous estimating techniques were employed. The research has four important findings; i.There is a cointegration relationship between indicators, ii.The external debt increases the current account deficit, iii.The increase of savings in Turkey decreases the current account deficit, iv.An increase in savings increases the current account deficit in Argentina, Egypt, Pakistan and Qatar. This study, which will contribute to the expansion of typology, is also contributory to the “Triple Deficit Hypothesisâ€

Suggested Citation

  • Gülgün ÇİĞDEM & Merve ALTAYLAR, 2020. "Cointegration Evidences From The New Fragile Five," JOURNAL OF LIFE ECONOMICS, Holistence Publications, vol. 7(3), pages 269-282, August.
    • Handle: RePEc:jle:journl:v:7:y:2020:i:3:p:269-282
    DOI: 10.15637/jlecon.7.020
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    More about this item

    Keywords

    Current Account Deficit; Savings; Triple Deficit; Heterogeneous Panel; Cointegration with Structural Breaks; Unit Root with Structural Breaks;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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