IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

An Investigation of Twin Deficit Hypothesis in Iran: Two Regimes Threshold Vector Autoregressive Approach

Listed author(s):
  • Kohansal , Mohammadreza

    ()

    (Professor of Agricultural Economics, Ferdowsi University of Mashhad)

  • Alizadeh, Parisa

    ()

    (Ph.D. Student of Agricultural Economics, Ferdowsi University of Mashhad)

Registered author(s):

    One of the most important economic problems of many developing countries is happening of the budget deficit and the current account deficit at the same time, that have adverse effects on performance of various sectors of the economy. In this study the twin deficit hypothesis in Iran was tested. For this purpose nonlinear relationship between budget deficit and current account deficit in the period of 1971-2012 was reviewed. At first, the stationary of time series variables examined. Then Johansen co-integration test was performed. There was a co-integration vector between budget deficit and current account deficit. The causality test in a frame of a vector autoregressive model showed a bi-directional causal relationship between the variables. Then the non-linearity test was performed and after confirmation of non-linearity, two regimes threshold vector autoregressive model was estimated. Also the unit root test of non-linear models (KS) was applied. The results showed that the current account deficit in the short run will be affected by budget deficit and current account deficit increase with the increasing of the budget deficit. But in the long run, these two variables are treated as independent together.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://ecoj.tabrizu.ac.ir/jufile?c2hvd1BERj00NTY5Jl9hY3Rpb249c2hvd1BERiZhcnRpY2xlPTQ1NjkmX29iPWIxNzRhODhjZDkyN2I2MDhiZjJkMjNjMDNjZTFjYjJm
    File Function: Full text
    Download Restriction: no

    Article provided by Faculty of Economics, Management and Business, University of Tabriz in its journal Quarterly Journal of Applied Theories of Economics.

    Volume (Year): 2 (2015)
    Issue (Month): 3 (December)
    Pages: 73-92

    as
    in new window

    Handle: RePEc:ris:qjatoe:0020
    Contact details of provider: Web page: http://www.ecoj.tabrizu.ac.ir/

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ris:qjatoe:0020. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sakineh Sojoodi)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.