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¿Hay evidencias de déficits gemelos en la economía dominicana?
[Is there evidence of twin deficits in the Dominican economy?]

Author

Listed:
  • Brito Romero, Marycris
  • Peguero, Anadel G.
  • Cruz-Rodríguez, Alexis

Abstract

The aim of this article is to examine the existence or not of the "twin deficits" in the case of the Dominican Republic in the period 1955-2014. Using an error correction vector (VEC), the results confirm a positive long run relationships between fiscal and trade balance deficits. Similarly, bidirectional causality between deficits is verified using the Granger test. However, the results of the variance decomposition show inconclusive results regarding causality. The results of impulse response functions suggest that the consequences of large budget and trade balance deficits become noticeable only over the long run. Additionally, the influence of factors such as trade openness and financial development contribute new elements that contribute to validate the model.

Suggested Citation

  • Brito Romero, Marycris & Peguero, Anadel G. & Cruz-Rodríguez, Alexis, 2020. "¿Hay evidencias de déficits gemelos en la economía dominicana? [Is there evidence of twin deficits in the Dominican economy?]," MPRA Paper 100938, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:100938
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    More about this item

    Keywords

    Fiscal deficit; trade deficit; cointegration.;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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