Fiscal Consolidation and, Current-Account Dynamics in South-Asian Countries.

Authors

Fareeha Riaz(1) Fareeha Riaz Corresponding author Affiliation National University of Modern Languages Islamabad Email addressfriaz@numl.edu.pk Other articles by this author , Sobia Parveen Sobia Parveen Other articles by this author , Adnan Ali Khan Adnan Ali Khan Other articles by this author

  1. National University of Modern Languages Islamabad

https://doi.org/10.36923/jcmi.v3i2.481

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Abstract

The study observes the effect of fiscal-policy shocks upon current-account balances and, contributed to provide an insight that how fiscal-policy shocks can influence current-account. For this purpose, Panel Structural Vector Autoregressive (PSVAR) model has been employed to investigate the influence of fiscal-policy shocks upon current-account considering the selected South-Asian Countries for the time period of 1984-2019. It provides an understanding that in what manner, fiscal shocks can determine the structure of current-account, and the effectiveness of output shocks, and, government shocks to manage the current account deficits. The main contribution of present study is considering South-Asia as an emerging-market characterized by massive deficits in current-account and, macroeconomic instability. The results suggest that expansionary fiscal shocks policy reduces the deficit in current account, which specify a divergence from twin-deficit approach.

Article information

Keywords
fiscal consolidationCurrent Account DynamicsPanel Structural Vector AutoregressiveSouth Asian Countries
Section
Articles
Issue
Vol. 3 No. 2 (2022)
Submitted
October 31, 2022
Accepted
December 1, 2022
Published
December 1, 2022
Corresponding author
Fareeha Riaz
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