Does fiscal policy matter for the trade account? A panel cointegration study
AbstractThis paper analyses the empirical relationship between fiscal policy and the trade account. Research prior to this paper did not consider that the components of private and public demand in the import demand equation exhibit different elasticities. Using pooled mean group estimation for annual panel data of the G7 countries for the years 1970 through 2002, we provide empirical evidence that the composition of overall demand – i.e. the distribution among public demand, private demand and export demand – has an impact on the magnitude of the trade account deficit. JEL Classification: F32, E62, F41
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Bibliographic InfoPaper provided by European Central Bank in its series Working Paper Series with number 0620.
Date of creation: May 2006
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Find related papers by JEL classification:
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-03 (All new papers)
- NEP-INT-2006-06-03 (International Trade)
- NEP-MAC-2006-06-03 (Macroeconomics)
- NEP-PBE-2006-06-03 (Public Economics)
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