Carlos Marinheiro () (GEMF and Faculdade de Economia, Universidade de Coimbra)
Abstract
This paper tries to evaluate whether Egypt’s public deficit has had any impact on current account imbalances, examining the validity of the twin deficit hypothesis for Egypt. We conclude for the presence of a (weak) long-run relationship between the budget deficit and the current account deficit. Yet, we reject the twin-deficit hypothesis: we found evidence in favour of a reverse Granger-causality running from the external deficit to the budget deficit. Further, we conclude against the validity of full Ricardian equivalence in Egypt and present evidence in favour of a high degree of capital mobility.
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Publisher Info
Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number
2006-07.
Length: 39 pages Date of creation: 2006 Date of revision: Publication status: Forthcoming in Journal of Policy Modeling. DOI: 10.1016/j.jpolmod.2007.12.001 Handle: RePEc:gmf:wpaper:2006-07
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 H6 - Public Economics - - National Budget, Deficit, and Debt O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
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