The Effects of Budget Deficit on Current Account: Case Study (Palestinian Territories 1996 – 2012)
International Journal of Economics, Finance and Management Sciences
Volume 3, Issue 1, February 2015, Pages: 57-67
Received: Jan. 16, 2015; Accepted: Jan. 29, 2015; Published: Feb. 13, 2015
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Authors
Khalil Ahmed El-Namrouty, Dep’t of Economics and Political Science, Islamic University, Gaza, Gaza Strip, Palestinian authority
Ahmed Mahmoud Saidam, Economics Development, Islamic University, Gaza, Gaza Strip, Palestinian authority
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Abstract
The researchers examined the effects of public budget deficit on current account in the Palestinian Territories (1996 - 2012). To determine the appropriate economic tools that can be used to reduce the current account chronic deficit, the nature and components of the Palestinian Authority’s expenditures and revenues will be studied. Statistical analysis approach is used to illustrate the impact of public budget deficit on current account. This was implemented after checking the stationary of time series by adopting unit root test (Augmented Dickey Fuller). The study findings confirm the positive relationship between public budget deficit and current account in the Palestinian Territories. It appears that an increase in public budget deficit by one USD million will increase the current account deficit by USD 3.08 million. In addition, balance of trade deficit increased by USD 465.3 thousand when the other independent variables such as government and private investments in the model remain constant.
Keywords
Public Budget Deficit, Current Account, Fiscal Policy, Palestinian Territories
To cite this article
Khalil Ahmed El-Namrouty, Ahmed Mahmoud Saidam, The Effects of Budget Deficit on Current Account: Case Study (Palestinian Territories 1996 – 2012), International Journal of Economics, Finance and Management Sciences. Vol. 3, No. 1, 2015, pp. 57-67. doi: 10.11648/j.ijefm.20150301.17
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