Testing the triple deficits in the emerging economies of Europe

In: Panoeconomicus: naučno-stručni časopis Saveza Ekonomista Vojvodine ; scientific-professional journal of Economists' Association of Vojvodina, Heft 00, S. 17-17

Open Access

Abstract

In the literature, increases in the ratio of current deficit to gross
domestic product (GDP) are considered a crisis indicator, and budget and
savings deficits are deemed to be significant causes of the current deficit.
This situation, called the triple deficit hypothesis in the literature, is
analyzed with the panel dynamic ordinary least square (panel DOLS) and fully
modified ordinary least squares (FMOLS) using 2000-2019 data for Bulgaria,
Czechia, Estonia, Latvia, Lithuania, Hungary, Malta, Romania, and Slovenia,
which are generally referred to as the emerging economies of Europe. The
results showed a long-term relationship between the variables. Accordingly,
budget and private savings deficits increase the current deficit in the long
term. The causality analysis found a reciprocal causal relationship between
the variables, such that while budget and private savings deficits cause an
increase in the current deficit, increases in the current deficit also
increase the budget and private savings deficits. Thus, the triple deficit
hypothesis is valid in these countries.