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Twin deficits in Cambodia: Are there Reasons for Concern? An Empirical Study

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  • Evan Lau
  • Tuck Cheong Tang

Abstract

This study examines the inter-linkages between Government budget balance, and external balance for a transition economy in South East Asia – Cambodia. The empirical results of the quarterly data between 1996 and 2006, support twin deficits hypothesis that is the budget deficits do cause external deficits, in the short run. These two macroeconomics variables are moving together in the long run. For implication, these findings provide an insight for the Cambodia’s policy design and formulation.

Suggested Citation

  • Evan Lau & Tuck Cheong Tang, 2009. "Twin deficits in Cambodia: Are there Reasons for Concern? An Empirical Study," Monash Economics Working Papers 11-09, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2009-11
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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2009/1109deficitslautang.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Budget Deficits; Cambodia; Current Account Deficit; Unit Root Tests;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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