تحليل العلاقة بين عجزي الموازنة العامة والحساب الجاري في مصر Analysis of the Relationship between the Budget and Current Account Deficits in Egypt

"The main purpose of the study is to analyze the relationship between the budget and current account deficits in the Egyptian economy, using annual time series data covering the period (81/1982 – 10/2011). This study tries to test the Ricardian equivalence and the Keynesian proposition. The Ricardian equivalence argues that the budget and current account deficits are not correlated, whereas the Keynesian proposition confirms the existence of a positive relationship between the two deficits. For this purpose, the study applies the Unit Root Test, using (Augmented Dickey - Fuller (ADF), and Phillips -Perron (PP)) tests, to determine the order of integrated for the two time series data. The relationship between budget and current account deficits will be analyzed by using three complementary approaches: the Cranger Causality Test, Johansen – Juselius Co-integration Test, and Vector Autoregressive Model (VAR). Econometric investigations reveal that budget and current account deficits are not cointegrated. The application of VAR model and Johansen – Juselius cointegration test do not support a long run relationship between the two deficits. In addition, the variance decompositions and impulse – response function can be generated from the VAR model to ensure and illustrate its results. Finally, the hypothesis of this study could not be accepted which ensure the Ricardian equivalence hypothesis. That's means that the economic policies undertaken by the Egyptian government to reduce the deficit in one of the two accounts had not any significant effect on the deficit in the other account."