Abstract
This study investigates the nexus between BD and CAD by employing the ADF & ARDL tests from 2000 to 2020. Moreover, it is also examined that whether the Keynesian Theory of Proposition or Ricardian Equivalence Hypothesis is more appropriate for selected developing economies. The result revealed that FD & CAD are positive & significant for LIC and UMC. However, a negative coefficient was found for LMC and all developing countries. REER significantly affects the CAB for LMC, UMC and all developing countries except LIC. The impact of GFCF on CAB is negative for all cases. The coefficient of GDPPCG and Trade are insignificant for LIC. However, a significant relationship was found for LMC, UMC, and for all developing countries. This paper also pointed the theory of Keynesian proposition is more appropriate for LIC & UMC. Similarly, the theory of the Ricardian Equivalence Hypothesis is more suitable for LMC and all developing countries.
Sohail ur Rasheed, Aamir Haq Nawaz, Khawaja Asif Mehmood, Sidra Ilyas. (2023) BUDGET ALLIANCE, MACROECONOMIC VARIABLES, AND TWIN DEFICIT: A COMPARATIVE STUDY OF SELECTED DEVELOPING COUNTRIES, PAKISTAN ISLAMICUS (An International Journal of Islamic & Social Sciences), PAKISTAN ISLAMICUS: July -September; Vol-03 Issue- 02, Issue 2.
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