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Twin Deficits Phenomenon in the West African Economic and Monetary Union Countries: Panel Data Analysis

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  • Kouassi Yeboua

    (Marmara University Istanbul, Turkey)

Abstract

For a long time, the West African Economic and Monetary Union (WAEMU) countries have been experiencing persistently high budget and current deficits. This study was undertaken to empirically test the “Twin Deficits Hypothesis” in these countries. The analysis was conducted within the framework of the Panel Vector autoregressive (VAR) approach over the period 1975–2013. In contrast to the conventional view which claims a one-way relationship between budget and current account deficits, the results show that budget deficits lead to a deterioration in the current account balance, and vice versa (bilateral relationship). We also found that budget deficits have an impact on current account balance mainly through imports.

Suggested Citation

  • Kouassi Yeboua, 2020. "Twin Deficits Phenomenon in the West African Economic and Monetary Union Countries: Panel Data Analysis," Working Papers 377, African Economic Research Consortium, Research Department.
    • Handle: RePEc:aer:wpaper:377
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    Cited by:

    1. Brito Romero, Marycris & Peguero, Anadel G. & Cruz-Rodríguez, Alexis, 2020. "¿Hay evidencias de déficits gemelos en la economía dominicana? [Is there evidence of twin deficits in the Dominican economy?]," MPRA Paper 100938, University Library of Munich, Germany.

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