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Does Fiscal Policy Matter for the Trade Account? A Panel Cointegration Study
Author:
Mr. Christiane Nickel
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and
Ms. Katja Funke
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Series:
IMF Working Papers
Volume/Issue:
Volume 2006: Issue 147
Language:
English
Publication Date:
01 Jun 2006
DOI:
https://doi.org/10.5089/9781451864076.001
ISBN:
9781451864076
ISSN:
1018-5941
Pages:
27
Keywords:
WP; government expenditure; fiscal policy
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper analyzes the empirical relationship between fiscal policy and the trade account. Research prior to this paper did not consider that the components of private and public demand in the import demand equation exhibit different elasticities. Using pooled mean group estimation for annual panel data of the G-7 countries for the years 1970 through 2002, we provide empirical evidence that the composition of overall demand-i.e., the distribution among public demand, private demand, and export demand-has an impact on the magnitude of the trade account deficit.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund