The Twin Deficits in Jordan During the Period (1980-2010) (A Case Study)

Qasim M. Jdaitawi, Mohammad S. Tarawneh

Abstract


This study aims to verify the existence of the phenomenon of Twin Deficits in the Jordanian economy, through determining the direction of the causal relationship between the state budget deficit and trade balance deficit during the period (1980-2010), Using cointegration methodology, Granger’s causality test, and variance components analysis as well as the test of Impulse Response Function, the empirical findings of this study confirmed the existence of the Twin Deficits for the Jordanian economy during the study period. Using cointegration methodology, proved the existence of a causal relationship between them, and determined the directions of the relationships.

Keywords


Twin Deficits, Budget Deficit, Trade Account Deficit, Granger Causality, Variance Decomposition, and Co-integration.

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