Twin deficits threat in the European Union

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dc.contributor.authorSiničáková, Marianna
dc.contributor.authorSulikova, Veronika
dc.contributor.authorGavurová, Beáta
dc.contributor.otherEkonomická fakultacs
dc.date.accessioned2017-03-21
dc.date.available2017-03-21
dc.date.issued2017-03-15
dc.description.abstractThe aim of the contribution was to identify presence and contagion threat of twin deficits, i.e. simultaneous budget and current account deficit in the EU countries. Using correlations and Granger causality testing we recorded existence of twin deficits in most of EU countries. In several countries we confirmed traditional causality that budget deficit implies current account deficit. In several other countries the opposite, known as current account targeting, was true. In two counties (Spain and Hungary) bi-causality was detected. We consider existence of bi-causality as the most complicated situation in practice. Then it is a real vicious cycle. Policy makers must target both imbalances at the same time, to solve this problem, which can be very difficult. Persistent macroeconomic problems in these two countries confirm our assumption.Our paper extends existing literature by determination of two thresholds for public debt-to-GDP which modify occurrence and risk of twin deficits in the EU countries. These break points were identified via threshold panel data model. Twin deficits problems are not probable for countries with public debt-to-GDP lower than 30.668%. However, risk of this phenomenon is much higher if public debt is from 30.688% to 98.126%. Countries with public debt over 98.126% suffer from high and persistent twin imbalances. Therefore we suggest reconsideration of Maastricht criterion on public debt and its reduction to 30%. Finally we observe contagion effect of twin deficits throughout EU countries regardless their economic performance or the euro area membership which is indirectly triggered also in the case of non-euro area members.en
dc.formattext
dc.format.extent144-156 s.cs
dc.identifier.doi10.15240/tul/001/2017-1-010
dc.identifier.eissn2336-5604
dc.identifier.issn1212-3609
dc.identifier.urihttps://dspace.tul.cz/handle/15240/19861
dc.language.isoen
dc.publisherTechnická Univerzita v Libercics
dc.publisherTechnical university of Liberec, Czech Republicen
dc.publisher.abbreviationTUL
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dc.relation.ispartofEkonomie a Managementcs
dc.relation.ispartofEconomics and Managementen
dc.relation.isrefereedtrue
dc.rightsCC BY-NC
dc.subjectimbalancesen
dc.subjecttwin deficitsen
dc.subjectcurrent accounten
dc.subjectbudget balanceen
dc.subjectthresholden
dc.subject.classificationG34
dc.subject.classificationM12
dc.titleTwin deficits threat in the European Unionen
dc.typeArticleen
local.accessopen
local.citation.epage156
local.citation.spage144
local.facultyFaculty of Economics
local.fulltextyes
local.relation.abbreviationE&Men
local.relation.abbreviationE+Mcs
local.relation.issue1
local.relation.volume20
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