Twin Deficits in Developing Economies
IMF Working Papers, July 27, 2018
Source details
- Canonical URL
- Twin Deficits in Developing Economies
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Bibliographic details
- Authors: Davide Furceri, Aleksandra Zdzienicka
- Published: July 27, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484364000.001
Key findings
- A one percent of GDP unanticipated increase in the government budget balance improves, on average, the current account balance by 0.8 percentage point of GDP.
- This estimated effect is substantially larger than that obtained using standard measures of fiscal impulse, such as the cyclically-adjusted budget balance.
Heterogeneity and conditional effects
- The impact of an unanticipated fiscal improvement on the current account tends to be larger:
- during recessions;
- in countries that are more open to trade;
- in countries that have less flexible exchange rate regimes;
- in countries with lower initial public debt-to-GDP ratios.
Subject and keywords
- Subject: Current account, Current account balance, Expenditure, Fiscal consolidation, Fiscal policy
- Keywords: exchange rate, WP
Content in this bundle
- Twin Deficits in Developing Economies, WP/18/170, July 2018