## Twin Deficits in Developing Economies

_IMF Working Papers, July 27, 2018_

## Source details

**Canonical URL:** [Twin Deficits in Developing Economies](https://www.imf.org/en/publications/wp/issues/2018/07/27/twin-deficits-in-developing-economies-46016)

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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

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### 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

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## Content in this bundle

- **Twin Deficits in Developing Economies, WP/18/170, July 2018**
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_Source: https://www.imf.org/en/publications/wp/issues/2018/07/27/twin-deficits-in-developing-economies-46016_