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Title: |
Debt and Deficit Dynamics in New Zealand: Did Financial Liberalization
Matter? |
| Author: |
McNelis, Paul
D.; Siddiqui, Anjum |
| Author
Affiliation: |
Georgetown U; U
Auckland |
| Source: |
International Economic Journal, Autumn 1994, v. 8, no. 3, pp. 71-87 |
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Publication Date: |
Autumn 1994 |
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Abstract: |
This study attempts to determine
empirically the effects of financial liberalization on the relationship
between the much publicized Twin Deficits, in the fiscal and the current
accounts. We could not find any cointegrating relationship between the
twin deficits, but a cointegrating association was observed between
total external debt and the total government debt with the fiscal
deficits in New Zealand. Our results also establish that a tighter
linkage between the fiscal deficit and debt variables began to emerge
prior but close to the period of financial liberalization. This linkage
may have become more pronounced in New Zealand in anticipation of the
opening of the capital markets. |
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