Theoretical and Applied Economics
No. 3 / 2015 (604), Autumn
A Structural VAR analysis of Fiscal shocks on current accounts in Greece
IBS-Hyderabad, IFHE University, Hyderabad, India
Suresh K G
IBS-Hyderabad, IFHE University, Hyderabad, India
Mihai MUTAȘCU
University of Orléans, France
Abstract. The present study is, in particular, an attempt to test the relationship between budget deficit and current account balance in Greece, from 1976 to 2009, using a structural autoregressive (SVAR) model. We focused on Greece because this country has presented in the last years seriously fiscal changes, and severely damage in the level of macroeconomic variables. We find that in case of Greece there is no long run relationship between budget deficit and current account deficit either in the presence or in absence of structural breaks in the data set. Further, Impulse Response Functions (IRFs) calculated in the framework of SVAR shows that increase in budget deficit increases the current account deficit, which is consistent with the twin deficit hypothesis.
Keywords: Budget Deficit, Current Account Deficit, SVAR Analysis, Structural Breaks.
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Contents
- A Structural VAR analysis of Fiscal shocks
on current accounts in Greece
Aviral Kumar TIWARI
Suresh K G
Mihai MUTAȘCU
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