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Empirická verifikace vztahu mezi saldem hospodaření sektoru vládních institucí a běžného účtu platební bilance: Případ zemí Evropské unie
[Verification of Relationship Between General Government and Current Account Balances: An Example of EU Countries]

Author

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  • Kateřina Šímová

Abstract

The article focuses on the relationship between the general government balance and the current account of the balance of payments. The aim is to summarize the existing knowledge about the relationship based on the twin deficit theory and to carry out an empirical verification. As part of the analysis, the Granger causality method is first applied to each EU country separately, and then the threshold panel regression method is used. For the subsequent estimation of the threshold panel model, the direction of the relationship from the general government balance to the current account is considered based on the results of Granger causality. Within the panel, the dependence of the balances on the level of the general government debt to GDP is tested. First, the relationship and its strength are verified in all EU countries. Due to the diversity of EU countries, the economies are subsequently aggregated into sub-panels. Threshold values for general government debt affecting the strength of the relationship between balances are different for individual panels and depend, among other things, on the perception of these countries by the financial markets and often also on the (high) indebtedness of the private sector, which usually requires a more drastic fiscal policy response.

Suggested Citation

  • Kateřina Šímová, 2023. "Empirická verifikace vztahu mezi saldem hospodaření sektoru vládních institucí a běžného účtu platební bilance: Případ zemí Evropské unie [Verification of Relationship Between General Government an," Politická ekonomie, Prague University of Economics and Business, vol. 2023(2), pages 153-176.
    • Handle: RePEc:prg:jnlpol:v:2023:y:2023:i:2:id:1381:p:153-176
    DOI: 10.18267/j.polek.1381
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    References listed on IDEAS

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    More about this item

    Keywords

    General government balance; current account balance; twin deficit theory; general government debt; EU 27; threshold panel regression; Granger causality;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F30 - International Economics - - International Finance - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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