Atlantic Economic Journal

, Volume 26, Issue 2, pp 121–128 | Cite as

Brazil's twin deficits: An empirical examination

  • M. Faizul Islam


This paper examines empirically the causal relationship between budget deficits and trade deficits for Brazil from 1973:1Q through 1991:4Q. This relationship is investigated in the context of Granger's test of causality. The final prediction error criterion, as outlined by Hsiao [1981], is applied in determining the appropriate lag length of the two variables. Empirical results suggested the presence of bilateral causality between trade deficits and budget deficits.


Causal Relationship Prediction Error Empirical Result International Economic Public Finance 
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Copyright information

© International Atlantic Economic Society 1998

Authors and Affiliations

  • M. Faizul Islam
    • 1
  1. 1.University of PittsburghU.S.A.

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