한국의 재정적자와 경상수지: 오차수정모형을 이용한 인과분석

Korea's Twin Deficits: An Empirical Examination

This study aims to examine empirically whether higher budget deficits cause the current account deficits in Korea or vice versa. This test allows us not only to examine the general validity of the" twin deficits" hypothesis but also to help us to predict prospects for future Korean external balance positions. A multivariate than a bivariate framework is employed in order to avoid distorting causality inferences due to omission of relevant variables. The additional variable included is the foreign exchange rates. The estimated results indicate unidirectional causal relation running from current account deficit to budget deficit in the long-run and bi-directional relation between these two variables in the short-run.