twin deficit and foreign debt

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First Posted: 11/07/11 06:26 AM ET Updated: 11/07/11 07:38 PM ET

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Getting Serious about the Twin Deficits - Council on Foreign Relations
and why the twin deficits constitute an important foreign policy issue—and how . How are these trends in the current account deficit and foreign debt linked?

Twin deficits – another mainstream myth | Bill Mitchell – billy blog
Sep 13, 2010 . This is the so-called Twin Deficits hypothesis. Reacting to the growing debt levels , it is alleged that external funds managers can enforce higher .

Further, the government debt and foreign debt would burden future . In this piece, we will argue that the twin deficits are, indeed, “unsustainable”, but for .

Financial Frictions and Household Debt: a New Perspective on Twin ...
parallel growth of private and external debt, shown in Figures 1 and 2, stressing . 3Generating twin deficit by debt financed tax cuts is not trivial since standard .

The Effect of the Twin Deficits on Foreign Debt in Jordan: an ...
This study aims to investigate the effect of the Twin Deficits, i.e., government budget deficit, and current account deficit, on the foreign debt in Jordan during the .

CBC: What kinds of problematic lending practices are you seeing?

Do Tax Cuts Generate Twin Deficits? A Multi-Country Analysis
t ) denotes debt servicing and (Gt ?Tt) is the primary deficit. The external deficit is . To engineer a twin deficit, the budget deficit must generate an external deficit.

Twin Deficits and Inflation Dynamics in a Mundell-Fleming-Tobin ...
We study its accumulation laws of government and foreign debt (or sur- pluses) and . 2.6 Real twin deficit accumulation and inflation dynamics . . . . . . . . . . . 14 .

Nouriel Roubini
the U.S. net foreign debt to grow from the 25 percent of GDP level of 2004 to . were instead driven by the widening fiscal deficit, the twin deficit phenomenon.

The Trade Deficit
The U.S. trade deficit reflects the successful efforts of foreign exporters in the aggregate to . investments, their holding of public debt increases along with the trade deficit. The so-called twin deficits -- budget deficit and trade deficit – are not .

Financial Scene - Troublesome twin deficits - The Hindu
Oct 10, 2011 . Financial Scene - Troublesome twin deficits . The proportion of short-term external debt to total external debt may still be small, but its .

Have the Implications of Twin Deficits Changed?: Sudden Stops ...
deficit) below ?5% as a percentage of GDP and TwinD is not one and 0 otherwise. LowReserves takes one if Short-term Foreign Debt / Reserves >1 and 0 .

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Fiscal policy and private saving in Australia: Ricardian equivalence ...
twin deficits and broader policy inferences, Doctor of Philosophy thesis, . widening of the current account deficit; while net foreign debt increased from around .

The US as a Net Debtor: The Sustainability of the US External ...
deficits. Moreover, interest payments on existing external debt have not been much of a burden on the U.S. . investment (the “twin deficits” phenomenon. 9. ).

Twin Deficits: Apparition or Reality?
the twin deficit issue exists (see e.g. Kearney and. Monadjemi, 1990 for a discussion), empirical research spe- cific to the internal±external debt issue is rather .

The US twin deficits in perspective: an econometric assessment
2002 the United States are confronted again with a “twin deficit” problem. . external debt stock to the factor income balance this equation allows the model to .

Chapter 7: Pakistan external debt and liabilities
stock of unfunded debt. 6.3 External Debt. The widening of the twin deficits during the last couple of years has led to significant rise in Pakistan external debt and .

UNITED STATES: Re-emergence of twin deficits sparks alarm ...
Nov 17, 1993 . The re-emergence of concurrent deficits in the external current account and the federal budget of the United States — dubbed the "twin deficits" .

The Dynamics of Current Account and Budget Deficits in Selected ...
foreign deficits on the growth potentials of the domestic economy. . composition of public financing, (i. e debt versus taxes) have no effect on real interest . More elaborate explanations in support of the twin deficits hypothesis draw upon the .

will lead the country to increase its stock of net foreign debt and result of the budget deficit. Theoretically the mechanism behind the twin deficits could also .

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Twin Deficits Hypothesis and Capital Mobility: The ASEAN-5 ...
This paper investigates the relevance of the twin deficits hypothesis (TDH) in five . count deficits and the accumulation of a very large stock of foreign debt.

Topic 1: U.S. Current Accounts, Net Foreign Debt and the Dollar ...
Topic 1: U.S. Current Accounts, Net Foreign Debt and the Dollar. References: Chinn, Menzie, “Getting Serious about the Twin Deficits,” CSR NO. 10, Council on .

Nov 9, 2011 . An Explanation of the Twin Deficits: The Insiders – Outsiders Society. 5. . Table 1: Domestic and External Debt: A Cross Country Comparison .

Pathways Through Financial Crisis: India
To finance the twin deficits, India relied on external funds. Foreign investment at 0.1 . duced vulnerability was the absence of private sector external debt. Unlike .

Theoretical considerations of the twin deficit hypothesis are applied to . account deficit must be increasing its net foreign debt (or running down its net foreign .

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The Devaluing U.S. Dollar- A - Perspective
Ironically, the problems of the twin deficits are what cause the alarm about the falling . Just look at the massive defaults on the foreign debt crisis of the '70s.

International Macroeconomics
Twin Deficits: Fiscal Deficits and Current Account Imbal- . 5.4 Government Spending and Current Account Deficits . . 9 The Macroeconomics of External Debt .

We could not find any cointegrating relationship between the twin deficits, but a cointegrating association was observed between total external debt and the total .


public deficits, the result is a huge external debt. This long term unsustainable situation of twin deficits, in balance of payments and public finances, has resulted .

Twin Deficits - Gary North - Mises Daily
Jan 12, 2012 . This is why the twin deficits are connected. The US government is running massive deficits. Foreign central banks buy US government debt.

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03:28 PM on 11/08/2011

Country report CROATIA
crisis further worsened the country's twin deficits and external debt increased to 101% of GDP. (2010). Moreover, unemployment rose from 15.1% in 2007, .

India seen more vulnerable to external shocks as BoP worsens ...
Mar 30, 2012 . India seen more vulnerable to external shocks as BoP worsens, The onset of the twin-deficit syndrome had preceded the economic .

Morocco: Risk Assessment >> globalEDGE: Your source for Global ...
Deterioration in twin deficits, but relatively moderate external debt. The country has made efforts to put its public finances in order over recent years and this has .

and that the “twin” current account deficit was soaking up foreign saving. The result would be . Further, the government debt and foreign debt would burden .

Impact of Greece Crisis
Greece funded these twin deficits by borrowing in international capital markets, leaving it with chronically high external debt (115% of GDP in. 2009). Some of .

Output file
On the Dynamics of the Greek Twin Deficits: Empirical evidence . to their foreign counterparts, so that an excessive accumulated external debt burden is .

Edward M Gramlich: Budget and trade deficits - linked, both ...
Feb 25, 2004 . long run, but not twins . as one of “twin deficits. . optimal stock of net external debt can be determined in the same framework from an open .

12:59 AM on 11/08/2011

How Scary Is the Deficit? | Foreign Affairs
The United States' current account deficit and foreign debt are not dire threats to its . Fortunately, their rigid "twin deficit" view is not supported by the facts.

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The short-term external debt is high, but nothing like what we saw in Asia. When the debt is . But you have the twin deficits, fiscal and external. What should .

11:33 PM on 11/07/2011

Chapter 18: International Trade | Macroeconomics, 2e: W. W. Norton ...
The twin deficits are the phenomenon of large government and trade deficits. c. Net Foreign Assets and Foreign Debt. Net foreign assets are the difference .

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CEEC vs. PIGS: a comparative panel assessment of financial ...
3. This paper deals with the issue of external and public debt sustainability, and of “twin deficits” behaviour, in two groups of European peripheral countries: the .

10:35 PM on 11/07/2011

Determination of Foreign Debt Burden in Pakistan
relationship between external debt and exchange rate, fiscal deficit and . Keywords: Foreign debt, Exchange rate, Fiscal deficit, Terms of trade. . Aqeel, A & Nishat, M. (2000), The Twin Deficit Phenomenon: Evidence for Pakistan.

life insurance and jihadists - Journal of Policy Modeling - The twin deficits ...
We re-examine the issue of the twin deficits hypothesis since recent . Budget and current account deficits along with high domestic and external debt have .

10:33 PM on 11/07/2011

Alfidi Capital Blog: US Persists With Big Twin Deficits Into 2012
Feb 10, 2012. America's big twin deficits in foreign trade and the federal budget. . with healthy economies to see if low debt-to-GDP ratios are a factor in .

06:22 PM on 11/07/2011

Romania, which uses the twin deficits concept. We conclude that . been recorded even in times of high economic growth, while foreign debt has accumulated at .

Economic restructuring and the debt problem: the Greek case TAKIS ...
The twin deficits in the balance of payments and the budget are the main . Thus, the external debt (private & public) is estimated to have been about $25 bns. in .

to insolvency, building up excessive net foreign debt, raising the prospects of . The twin deficits argument—on which the fiscal consolidation strategy was .

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Pakistan economy: Continuity or change
This is intended to lower the inflation rate, build up foreign exchange reserves, reduce the domestic and external debt, cut down the budgetary deficit, and .

05:56 PM on 11/07/2011

India in Twin Deficit Club – Implications and Issues
Feb 2, 2011 . In this paper, we look at the twin deficits issue from an Indian . deficit by foreign savings/foreign capital inflows. . So as long as debt flows .

01:44 PM on 11/08/2011

The Unsustainable US Current Account Position Revisited!
2For another early examination of US external deficit sustainability, see Mann ( 1999). 1 . net foreign debt, an effect that will play out in reverse if long-term dollar interest rates rise . twin deficits, and the need to rebalance monetary policy.

02:41 PM on 11/07/2011

The Ticking Debt Bomb: Why the U.S. International Financial ...
Jun 1, 1999 . The rising trade deficit and mushrooming foreign debt are thus warning . rethinking of the conventional wisdom on the so-called “twin deficits.

02:46 PM on 11/07/2011

Roubini - NYU Stern - New York University
“The U.S. Twin Deficits and External Debt Accumulation: Are They Sustainable?,” (with Brad Setser), work in progress, August 2004. “Fiscal Policy and Debt .

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02:13 PM on 11/07/2011

Twin Deficits: Implications of Current Account and Fiscal Imbalances ...
The external account and the fiscal balance, labeled the “twin deficits,” have to . Of course, this debt generates a continuous flow of interest payments (or trans- .

01:46 PM on 11/07/2011

MMP #34 Functional Finance and Exchange Rate Regimes: The Twin
Jan 29, 2012 . We haveseen that national budget deficits and debts do not matter so far . budget deficits, trade deficits and foreignaccumulation of treasuries, .

The Causes of the U.S. Trade Deficit
interest payments required to service our growing foreign debt are becoming a . Starting with the twin deficit view, Figure 3 shows very clearly that the two .

Impact of Public Debt on the economic growth of Pakistan
has been facing the problem of twin deficits and resultantly to finance their developmental activities government has to rely on public external and domestic debt.

Twin Deficits and Sustainability
Further, the government debt and foreign debt would burden future generations of Americans, who would have to make . Twin Deficits and Sustainability .

Working paper no. 52 [EBRD - Publications]
and the currency devalued as a result of excessive external debt and twin deficits . May 1998. -. Impact of moving standardisation which ceases to include March .

Definition of Twin Deficits in Economics |
The effects of a twin deficit can be detrimental, as each deficit can feed... . The term twin deficits in economics refers to a country's domestic budget and foreign trade . With the federal debt at historical highs, many politicians, economists, .

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Budget and External Deficits - Federal Reserve Bank of San Francisco
return of the external deficit's twin? In this paper, I . US current account position into surplus and paying down some of the net external debt that has already .

02:21 PM on 11/07/2011

Fiscal Scenario of South
Resultantly, what is known as a 'Twin Deficit problem' has emerged. If the deficit is filled . Asian economies have relied on debt and other foreign resources to .

01:47 PM on 11/08/2011

Twin deficits in Egypt
deficit in Egypt, i.e. whether there is evidence in favour of a twin deficit. In the 1980's both the US external deficit and the budget deficit increased significantly. As .

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01:09 PM on 11/07/2011

Selection of Identification Scheme
In spite of concerns about “twin deficits” (fiscal and the current account . will eventually increase the foreign debt to GDP ratio to much higher levels in the next .

Jordan: Risk Assessment >> globalEDGE: Your source for Global ...
Persistence of large twin deficits (public and external) The accumulation of large fiscal deficits, albeit trending down in 2010/11, has caused the public debt to .

negative impact of a series of external economic shocks. Argentina was left with a twin-deficit, current account and fiscal debt, that undermined both debt and .

The European monetary crisis explained
Budget deficit w/o interest on debt (% of GDP), -4,9, -2,8, -1,8 . The Greek State is nearing defaulting on its foreign liabilities, and it is running . or funds, because France and its own alarming twin deficits is not far from the situation of Greece.

Revista de Economia Política - The project: financial instability and ...
For sure, we can escape from this question by assuming the twin deficits hypothesis. . foreign indebtedness, and eventually crisis or default on the foreign debt.

09:11 PM on 11/07/2011

How The Dollar Hegemony Fuels The US Twin Deficit And Produces ...
Aug 24, 2011 . (see figure 5) That is to say, excluding this colossal debt to foreign . central bank intervention that financed the growing U.S. twin deficits.

12:42 PM on 11/07/2011

Functional Finance and Exchange Rate Regimes: The Twin Deficits ...
Jan 30, 2012 . In conclusion, while there are links between the “twin deficits”, they are not the . default on its debt; b) they pose an inflation, or even a hyperinflation, risk; . When foreign nations run trade surpluses (and the US runs a trade .

paper an attempt has been made to empirically test the twin deficits hypothesis in . must be increasing its net foreign debt (or running down its net foreign .

Lessons from Greece debacle | The Jakarta Post
Jul 13, 2010 . As a result, Indonesia has lower ratios of government debt-to-GDP as well as external debt-to-GDP. The twin deficits in Greece reflect .

The Determinants and Excessiveness of Current Account Deficits in ...
deterioration, confirming the validity of the twin deficit hypothesis in the region . openness (OPEN), external debt (EXTDEBT) and GDP growth of the EU-15 .

Debt Problems and the World Macroeconomy
Table 16.1. The Current Account Deficit and External Debt: Countries with . consequences U.S. adjustment of the twin deficits can have for debtor countries.

Balance of Trade
Nevertheless, the net result of the twin deficits was that the U.S. dependence on foreign funds grew, and so did the U.S. foreign debt. In fact, the United States .

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Fiscal Policy and the Current Account;Fiscal Policy, Stabilization ...
May 1, 2011 . ?twin deficit? hypothesis, particularly for the case of the United States. . including on external debt, thereby improving the current account .

02:25 PM on 11/07/2011

Andreea STOIAN, PhD Emilia CAMPEANU, PhD Department of ...
has a significant impact on external imbalances which is called “twin deficits”; (ii) . The relationship between fiscal balance and current account deficit has also been . [29] Mariano,R.S., Villanueva, D. (2005), Sustainable External Debt .

Balance of Payments
Problem with deficit is that it makes foreign debt grows cumlatively higher. . Twin deficit hypotheses - government deficit leads to the current account deficit.

The framework yields results relevant to the twin deficits . In deficit countries, including the United States, whose external deficit exceeds 5% of gross domestic product (GDP), it has . foreign debt is zero, such that national output and income .

03:15 PM on 11/07/2011

Chapter 1
The twin deficit hypothesis is empirically verified for the period 1991-2010. . CA deficits piled up to a net external debt equal to 88% of GDP in 2009.

12:40 PM on 11/07/2011

Foreign Ownership of U.S. Companies Rising – Trade Reform
Mar 18, 2011 . Citizens For Equal Trade (CET) [1] is projecting that Foreign Controlled . The “ twin deficits” [15] (trade deficit and national debt), are highly .

12:39 PM on 11/07/2011

Twin Deficits in Lebanon: A Time Series Analysis . the foreign Lebanese debt since the early 2000s implies that Lebanon may have to rely more and more on .

Twin deficits hypothesis - Wikipedia, the free encyclopedia
The twin deficits hypothesis, also called the double deficit hypothesis or twin . it is that if foreigners' savings pay for the budget deficit, the current account deficit .

01:12 PM on 11/07/2011

Recovery: The Global Financial Crisis and Middle-Income Countries
term external debt was equivalent to the total foreign exchange reserves held by these countries' central banks. The twin deficits— plus excessive short- term .

01:51 PM on 11/07/2011

The Twin Deficits Phenomenon in Petroleum Economy: Evidence ...
The twin deficits are referred to by deficit in the budget (T-G) and the trade deficit by (X-M). To see . The inflow of the FDI will increase the external debt. So, the .

version of the «twin deficit hypothesis» due to the sharp increase in budget deficits from . The endogenous variables are thus US external debt and prices of .

Current Account Imbalances and The Role of Exchange Rate: The ...
The origins of the US external deficit – around 6.4% of GDP in 2006- the timing of the . a sustainable ratio of external debt? . The twin deficits in USA.

12:20 PM on 11/07/2011

No Painless Solution to Greece's Debt Crisis | Chatham House ...
. due to persistently high budget deficits, and a very rapid build up of excessive external debt due to several years of massive current account deficits. . option but to cut the twin deficits rapidly, implying a steep recession and drop in imports.

MIS059-041906 ZIRP_Global
Apr 17, 2006 . In particular, the large foreign debt accumulation in the US, resulting from . eliminate the US twin deficits and reduce US debt levels without .

RGE Monitor - February 4, 2009
Feb 4, 2009 . While external debt –about 60% of GDP in 2008 - is still moderate compared to . Hungary continues to suffer from twin deficits and high foreign .