IDEAS home Printed from https://ideas.repec.org/p/mlb/wpaper/893.html
   My bibliography  Save this paper

Budget Balance And Trade Balance:Kin Or Strangers. A Case Study Of Taiwan

Author

Listed:
  • Hsiao-chuan Chang

Abstract

In line with the deterioration of Taiwanese budget deficits, the trade surplus has also decreased. It is the ideal time to investigate the relationship between budget balances and trade balances. Unit root tests, cointegration tests, Granger causality tests and the VARs model are techniques used to test the Keynesian proposition and the Ricardian equivalence. The main findings are that Keynesian proposition is supported only by the model using data of the whole period. There is no support for the Ricardian equivalence. That budget balances and trade balances being kin or strangers varies over periods of data used.

Suggested Citation

  • Hsiao-chuan Chang, 2004. "Budget Balance And Trade Balance:Kin Or Strangers. A Case Study Of Taiwan," Department of Economics - Working Papers Series 893, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:893
    as

    Download full text from publisher

    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-04/893.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Pierre Perron & Serena Ng, 1996. "Useful Modifications to some Unit Root Tests with Dependent Errors and their Local Asymptotic Properties," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 435-463.
    2. Juann Hung & Susan Charrette, 1997. "The Looming U.S. External Debt: How Serious Is It?," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 32-41, July.
    3. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
    4. Elliott, Graham, 1999. "Efficient Tests for a Unit Root When the Initial Observation Is Drawn from Its Unconditional Distribution," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 767-783, August.
    5. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    6. Jeffrey D. Sachs & Nouriel Roubini, 1987. "Sources of Macroeconomic Imbalances in the World Economy: A Simulation Approach," NBER Working Papers 2339, National Bureau of Economic Research, Inc.
    7. Lori Leachman & Bill Francis, 2002. "Twin Deficits: Apparition or Reality?," Applied Economics, Taylor & Francis Journals, vol. 34(9), pages 1121-1132.
    8. Stephen M. Miller & Frank S. Russek, 1989. "Are The Twin Deficits Really Related?," Contemporary Economic Policy, Western Economic Association International, vol. 7(4), pages 91-115, October.
    9. Enders, Walter & Lee, Bong-Soo, 1990. "Current Account and Budget Deficits: Twins or Distant Cousins?," The Review of Economics and Statistics, MIT Press, vol. 72(3), pages 373-381, August.
    10. Fisher, Eric O'N, 1995. "A New Way of Thinking about the Current Account," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(3), pages 555-568, August.
    11. Perron, Pierre & Rodriguez, Gabriel, 2003. "GLS detrending, efficient unit root tests and structural change," Journal of Econometrics, Elsevier, vol. 115(1), pages 1-27, July.
    12. Elliott, Graham & Rothenberg, Thomas J & Stock, James H, 1996. "Efficient Tests for an Autoregressive Unit Root," Econometrica, Econometric Society, vol. 64(4), pages 813-836, July.
    13. Seater, John J, 1993. "Ricardian Equivalence," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 142-190, March.
    14. B. Douglas Bernheim, 1988. "Budget Deficits and the Balance of Trade," NBER Chapters,in: Tax Policy and the Economy: Volume 2, pages 1-32 National Bureau of Economic Research, Inc.
    15. Kenneth Kasa, 1994. "Finite horizons and the twin deficits," Economic Review, Federal Reserve Bank of San Francisco, pages 19-28.
    16. G. Vamvoukas, 1997. "Have large budget deficits caused increasing trade deficits? Evidence from a developing country," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 25(1), pages 80-90, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Keynesian proposition; Ricardian equivalence; unit root tests; Grangercausality tests; VARs model;

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:893. 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: (Dandapani Lokanathan). General contact details of provider: http://edirc.repec.org/data/demelau.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.