International Conference on Eurasian Economies

9-11 September 2015 – Kazan, RUSSIA

Paper detail

Paper ID : 1413
Status : Paper published
Language : Turkish
Topic : Macroeconomics
Presenter: Asst. Prof. Dr. Damira Baigonushova
Session : 5B Bölgesel Ekonomiler I

Testing the Twin Deficit Hypothesis for Kyrgyzstan Economy
Kırgızistan Ekonomisi İçin İkiz Açık Hipotezinin Test Edilmesi

• Asst. Prof. Dr. Damira Baigonushova (Kyrgyz-Turkish Manas University, Kyrgyzstan)

Abstract

Twin deficits hypothesis suggests that there is a positive relationship between budget and current account deficits. The present study examines Twin Deficits Hypothesis over the period of 2005:01–20013:12 in Kyrgyzstan by using Vector Autoregressive Model technique. The results show that there are relationships between government expenditure, export and import. The causalities are from government expenditure to export and import. These results confirm the Keynesian view, which asserts the existence of twin deficits, meaning that the state budget deficit at weak real economy, in an open economy, increase imports, which is the cause of twin deficits in the economy of Kyrgyzstan. To solve the problem of twin deficits, the state must pursue an active foreign trade policy in addition to fiscal policy, as it is proven empirically the state budget deficit has a big impact on trade deficit, but not the main factor of trade deficit.

JEL codes: H61, P33, H62

Baigonushova, Damira (2015). "Testing the Twin Deficit Hypothesis for Kyrgyzstan Economy" in Proceedings of International Conference of Eurasian Economies 2015, pp.271-281, Kazan, RUSSIA.

DOI: https://doi.org/10.36880/C06.01413

Full paper in PDF format.

Session 5B: Bölgesel Ekonomiler I