Twin Deficits Hypothesis and capital Mobility: The ASEAN-5 Perspective

Ahmad Zubaidi Baharumshah, Hamizun Ismail, Evan Lau


This paper investigates the relevance of the twin deficits hypothesis (TDH) in five Association of Southeast Asian Nations(ASEAN) countries. We examine the causal relation between current account deficits and investments. The empirical findings may be summarised as follows. First, TDH holds only for three countries: Malaysia, Thailand and the Philippines. In other words, a budget deficit plays a significant role in the determination of a current account deficit in all three countries. Second, the findings are in line with the widely held view that government expenditure crowds out private investmnet. Third, investment shows anoticeable impact on current account deficits. Finally, a high proportion of domestic investment is financed from international sources, which suggests that the Feldstein-Horioka puzzle is less important in these emerging economies.


Kertas ini mengkaji kepentingan hipotesis defisit berkembar untuk lima buah negara ASEAN. Kertas ini meneliti perkaitan sebab-menyebab di antara defisit akaun semasa, defisit belanjanawan, dan pelaburan. penemuan-penemuan kertas ini boleh diringkaskan seperti berikut: Pertama, hipotesis defisit berkembar tidak ditolak bagi tiga buah negara iaitu Malaysia, Thailand dan Filipina. kedua, penemuan dalam kertas ini selari dengan hujah yang mengatakan bahawa perbelanjaan kerajaan memberi kesan himpitan keluar kepada pelaburan. Ketiga, pelaburan membawa kesan ketara kepada defisit akaun semasa. Keempat, sebahagian besar pelaburan domestik dibiayai oleh sumber-sumber luar, dan dengan itu menyokong pernyataan bahawa teka-teki Feldstein - Horioka tidak begitu penting bagi negara -negara membangun yang dikaji dalam kajian ini.


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