{
  "title": "Twin Deficits in Developing Economies",
  "publication": "IMF Working Papers, July 27, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/07/27/twin-deficits-in-developing-economies-46016",
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  "summary": "This paper provides new evidence on the existence and magnitude of the “twin deficits” in developing economies. It finds that 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.",
  "sections": [
    {
      "heading": "Key findings",
      "content": "- 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.\n- This estimated effect is substantially larger than that obtained using standard measures of fiscal impulse, such as the cyclically-adjusted budget balance."
    },
    {
      "heading": "Heterogeneity and conditional effects",
      "content": "- The impact of an unanticipated fiscal improvement on the current account tends to be larger:\n  - during recessions;\n  - in countries that are more open to trade;\n  - in countries that have less flexible exchange rate regimes;\n  - in countries with lower initial public debt-to-GDP ratios."
    },
    {
      "heading": "Subject and keywords",
      "content": "- Subject: Current account, Current account balance, Expenditure, Fiscal consolidation, Fiscal policy\n- Keywords: exchange rate, WP\n\n---\n\n Content in this bundle\n\n- Twin Deficits in Developing Economies, WP/18/170, July 2018\n  - Twin Deficits in Developing Economies, WP/18/170, July 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Twin Deficits in Developing Economies, WP/18/170, July 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/07/27/twin-deficits-in-developing-economies-46016"
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    "[Markdown version](/en/publications/wp/issues/2018/07/27/twin-deficits-in-developing-economies-46016/index.md)",
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    "Authors: Davide Furceri, Aleksandra Zdzienicka",
    "Published: July 27, 2018",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484364000.001",
    "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.",
    "The impact of an unanticipated fiscal improvement on the current account tends to be larger:",
    "Subject: Current account, Current account balance, Expenditure, Fiscal consolidation, Fiscal policy",
    "Keywords: exchange rate, WP",
    "**Twin Deficits in Developing Economies, WP/18/170, July 2018**"
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