Kocaeli University/Faculty of Economics and Administrative Sciences/Department of Economics/Department of Policy of Economics, Kocaeli/Turkey
2nd International Scientific Conference on Recent Advances in Information Technology, Tourism, Economics, Management and Agriculture – ITEMA 2018 – Graz, Austria, November 8, 2018, CONFERENCE PROCEEDINGS published by the Association of Economists and Managers of the Balkans, Belgrade, Serbia; ISBN 978-86-80194-13-4
The main aim of this paper is to investigate the twin deficit problem for the Indian economy using Granger Causality Test for the period 1988-2017. The co-integration analysis shows that there is a long run relation between budget deficit and current account balance. Despite the high savings rates, the twin deficits are valid for the Indian economy. The direction of the relationship is budget deficit to current account balance according to Granger Causality Test results. This result is consistent with the traditional Keynesian twin deficit hypothesis.
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