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CEEC vs. PIGS: a comparative panel assessment of financial sustainability and twin deficits

Listed author(s):
  • Alberto Bagnai

    ()

    (University of Pescara)

This paper analyses the relation between the external and government deficits in a panel of CEEC economies and, separately, in PIGS economies. We first assess by panel unit root tests whether the fiscal and external intertemporal budget constraints hold, and then examine the role of public and private expenditure in the dynamics of external indebtedness by panel regression. The results show the importance of private capital flows in the current external imbalances of European countries, with different implications for the two groups of countries considered.

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Paper provided by Dipartimento di Economia e Finanza, LUISS Guido Carli in its series Working Papers LuissLab with number 1088.

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Date of creation: 2010
Handle: RePEc:lui:lleewp:1088
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