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Interaction Between Twin Deficits: Indian Experience In The Macroeconomic Reform Period

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  • Hrushikesh Mallick

    (Institute for social and Economic Change)

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    Abstract

    The study investigates the interaction between twin deficits in the context of India during the macroeconomic reform period from 1994: II to 2001: I. Using the vector autoregression (VAR) model, it shows that there exists one-way interaction between the two deficits. The increase in fiscal deficit reduces the current account deficit, which contradicts most of the studies carried out in the context of other countries. This indicates a need to reinvestigate the determinants which could explain such inverse relationship.

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    Bibliographic Info

    Paper provided by Institute for Social and Economic Change, Bangalore in its series Working Papers with number 135.

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    Length: 23 pages
    Date of creation: 2003
    Date of revision:
    Handle: RePEc:sch:wpaper:135

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    Keywords: Twin Deficit; Fiscal Deficit; Current Account Deficit;

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