Cogency of Twin and Triple Deficit in India

Akanksha Singh Fouzdar, Swami Prasad Saxena
DOI: http://dx.doi.org/10.19085/sijbpg100701

Abstract

The emergence of the current account deficit (CAD) based on the gross fiscal deficit (GFD) has been the focus of attention in the Indian economy. The theoretical underpinnings of Ricardian and Keynesian were different from their explanations, so the researchers sought to choose to be independent of their views. Along with Feldstein-Horioka puzzle which examined the twin deficit hypothesis (TWH) researcher also look for the role of saving-investment gap (S-IGap) which gave emergence of triple deficit hypothesis for a time spanning from1990-91 to 2019-20. Granger Causality under VAR environment was used to analyze the association and provide evidence on the TWH and TDH for India. The main contribution of this study is to propose an idea regarding the direction of the validity of the TWH and TDH in India. The FD, CAD, and S-Igap reflect government expenses, providing insights into the financial conditions and spending patterns of the government.

Keywords

Current Account (CA), TWH, TDH, Granger Causality (GC) Test

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