BUDGET ALLIANCE, MACROECONOMIC VARIABLES, AND TWIN DEFICIT: A COMPARATIVE STUDY OF SELECTED DEVELOPING COUNTRIES

Authors

  • Sohail ur Rasheed Visiting Faculty Member, Bahauddin Zakariya University, Multan, Punjab, Pakistan.
  • Aamir Haq Nawaz MS Scholar (Computer Science). National College of Business Administration and Economics, Sub Campus Multan, Pakistan.
  • Khawaja Asif Mehmood Assistant Professor (Economics), School of Economics, Bahauddin Zakariya University, Multan, Pakistan.
  • Sidra Ilyas Assistant Professor (Economics), School of Economics, Bahauddin Zakariya University, Multan, Pakistan.

Keywords:

Current Account Balance, Fiscal Deficit, Real Effective Exchange Rate, Developing Countries

Abstract

This study investigates the nexus between BD and CAD by employing the ADF & ARDL tests from 2000 to 2020. Moreover, it is also examined that whether the Keynesian Theory of Proposition or Ricardian Equivalence Hypothesis is more appropriate for selected developing economies. The result revealed that FD & CAD are positive & significant for LIC and UMC. However, a negative coefficient was found for LMC and all developing countries. REER significantly affects the CAB for LMC, UMC and all developing countries except LIC. The impact of GFCF on CAB is negative for all cases. The coefficient of GDPPCG and Trade are insignificant for LIC. However, a significant relationship was found for LMC, UMC, and for all developing countries. This paper also pointed the theory of Keynesian proposition is more appropriate for LIC & UMC. Similarly, the theory of the Ricardian Equivalence Hypothesis is more suitable for LMC and all developing countries.

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14 Eng Final July Dec 2023 Vol 03 Issue 02 Citation Page

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05-08-2023

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Rasheed, S. ur, Nawaz, A. H., Mehmood, K. A., & Ilyas, S. (2023). BUDGET ALLIANCE, MACROECONOMIC VARIABLES, AND TWIN DEFICIT: A COMPARATIVE STUDY OF SELECTED DEVELOPING COUNTRIES. PAKISTAN ISLAMICUS (An International Journal of Islamic & Social Sciences), 3(2), 178–196. Retrieved from http://pakistanislamicus.com/index.php/home/article/view/57

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Vol. 3 No. 2 (2023): July - September. PAKISTAN ISLAMICUS

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