The Relationship between Current Account Deficits and Growth in Montenegro: ARDL Bounds Testing Approach

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ÖZER M., Zugic J., Tomas-Miskin S.

JOURNAL OF CENTRAL BANKING THEORY AND PRACTICE, vol.7, no.3, pp.5-24, 2018 (ESCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 7 Issue: 3
  • Publication Date: 2018
  • Doi Number: 10.2478/jcbtp-2018-0020
  • Journal Name: JOURNAL OF CENTRAL BANKING THEORY AND PRACTICE
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus
  • Page Numbers: pp.5-24
  • Keywords: Current account deficit, ARDL Bounds testing, Granger Causality, Co-integration, Montenegro Economy
  • Anadolu University Affiliated: Yes

Abstract

In this study, we investigate the relationship between current account deficits and growth in Montenegro by applying the bounds testing (ARDL) approach to co-integration for the period from the third quarter of 2011 to the last quarter of 2016. The bounds tests suggest that the variables of interest are bound together in the long run when growth is the dependent variable. The results also confirm a bidirectional long run and short run causal relationship between current account deficits and growth.