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On The Twin Deficits Hypothesis: Evidence From Turkey

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  • Burcu KIRAN

Abstract

This paper examines the long run relationship between trade deficit and budget deficit in Turkey in the context of fractional cointegration approach. This approach relaxes the assumption in the conventional cointegration analyses that the cointegrating residuals must be integrated of zero and allows it to take any real value. The empirical results of the annual data over the period from 1975 to 2009 show that there is little evidence for the presence of fractional cointegration relationship between trade deficit and budget deficit, hence, for the validity of twin deficits hypothesis in Turkey.

Suggested Citation

  • Burcu KIRAN, 2011. "On The Twin Deficits Hypothesis: Evidence From Turkey," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(1).
  • Handle: RePEc:eaa:aeinde:v:11:y:2011:i:1_6
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    File URL: http://www.usc.es/economet/reviews/aeid1116.pdf
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    References listed on IDEAS

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    1. Nickel, Christiane & Funke, Katja, 2006. "Does fiscal policy matter for the trade account? A panel cointegration study," Working Paper Series 620, European Central Bank.
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    Cited by:

    1. Manamba Epaphra, 0. "The Twin Deficits Hypothesis: An Empirical Analysis for Tanzania," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 20(65), pages 2-34, September.
    2. repec:kap:iaecre:v:19:y:2013:i:3:p:289-310 is not listed on IDEAS
    3. Francesco Forte & Cosimo Magazzino, 2013. "Twin Deficits in the European Countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(3), pages 289-310, August.

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    More about this item

    Keywords

    C10; E60; F10;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F10 - International Economics - - Trade - - - General

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