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Structural breaks and twin deficits hypothesis in African countries

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journal contribution
posted on 27.02.2015, 14:36 by Ahmad Hassan Ahmad, Olalekan B. Aworinde
The study examines the twin deficits hypothesis in a sample of twelve African countries for the period between 1980 and 2009. These countries have experienced both the current account and the fiscal deficits, among others, that prompted an introduction of structural reforms. The paper explores long-run relationship between the series and their short-run dynamics within the context of endogenously determined structural breaks. The identified dates are generally associated with external factors that include commodity price boom and burst cycles that the countries heavily depend on. The estimated results for eight of the countries indicate that there is a positive relationship between the current account and fiscal deficits and therefore, support the twin deficits hypothesis. Results for the remaining four countries of Ethiopia, Kenya, South Africa and Uganda, on the other hand, show that the relationship between the two is negative.

History

School

  • Business and Economics

Department

  • Business

Published in

Economic Change and Restructuring

Volume

48

Issue

1

Pages

1 - 35 (35)

Citation

AHMAD, A.H. and AWORINDE, O.B., 2015. Structural breaks and twin deficits hypothesis in African countries. Economic Change and Restructuring, 48 (1), pp.1-35.

Publisher

© Springer Science+Business Media New York

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2015

Notes

The final publication is available at Springer via http://dx.doi.org/10.1007/s10644-014-9154-2

ISSN

1573-9414

eISSN

1574-0277

Language

en

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