Evaluation of the Relationship of Current Account Deficit and Financial Development on the Axis of Panel Causality Analysis
Journal Title: Uluslararası Ekonomi ve Yenilik Dergisi - Year 2015, Vol 1, Issue 2
Abstract
In the literature, beside the view stating that financial development which gained momentum in recent years has an impact on current deficit, the increase occurring in current deficit provide contribution to the financial development by increasing demand to financial instruments. The main objective of the work in this direction is; the detection of the causality between financial development and the current account deficit and if later on to determine the effects of the causality. Therefore, for 24 OECD country the direction of current deficit and financial development between the years 1995-2012 has been determined with the Dumitrescu-Hurlin panel causality test, short-term coefficients related to the factors on the model formed towards the acquired model have been calculated by Feasible Generalized Least Squares (FGLS) method. As a result of analysis, we did not find impact of the current account deficit on financial development; but negative effect of the financial development to the current account deficit has been found.
Authors and Affiliations
Ali Eren Alper, Gürçem Oransay
Keywords
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