Twin Deficits and Debts in 6 ASEAN Countries: A Panel Approach

Abstract

In order to maintain the macroeconomic stability and sustainable economic growth, the current account deficit and fiscal deficit must be controlled. Besides, a country may encounter deficits that result in accumulation of debt during economic shock. This study aims to examine relationship between twin deficits and debts. The sample period is from 1990 to 2016 annually for 6 ASEAN countries. The methodology is pooled mean group (PMG) estimation. The finding shows that current account balance (CAB) and fiscal balance (FB) have positive significant relationship with the presence of debts.