On the causal relationship between fiscal and macroeconomic variables: A directed graphs approach Academic Article uri icon

abstract

  • This study uses an error correction model and directed acyclic graphs to investigate the dynamic structure of the budget deficit, private investment and economic growth of Taiwan over the period 1971-2004. Our findings indicate that the budget deficit, private investment and economic growth are cointegrated. The directed graph results show that the innovations in private investment lead real GDP and the innovations in budget deficits lead real GDP and interest rates in contemporaneous time. And, the budget deficit is the major contribution to the changes of private investment and economic growth. ICIC International 2008.

published proceedings

  • INTERNATIONAL JOURNAL OF INNOVATIVE COMPUTING INFORMATION AND CONTROL

author list (cited authors)

  • Wang, D. H., Bessler, D. A., & Yu, T. H.

complete list of authors

  • Wang, David Hanmin||Bessler, David A||Yu, Tiffany Huikuang

publication date

  • May 2008