PANEL CAUSAL ANALYSIS FOR CURRENT DEFICIT AND GROWTH: A CASE OF FRAGILE EIGHT COUNTRIES

Abstract

In developing countries in particular, the current deficit is one of the most important sources of economic growth, while increasing the vulnerability of national economies. In recent years, debates about the current account deficit have increased, the current deficit has been different from country to country and the economy of that country has been associated with fragility and crime susceptibility. Due to the fragility of the current account, the risk of growth in the financial crisis in the face of a shock to the country will also negatively affect the growth of the current account, which is significant for the country's economies. The three main results that increase the vulnerability can be said as the current deficit, inflation and external debt, especially for the developing countries. From this point of view, Kónya (2006) panel causality test was applied to the current deficit and growth relationship for fragile eight countries and it was determined that one-way causality from current growth to growth.