Abstract This study provides an empirical analysis for Egypt of the link between fiscal and current account imbalances, which is also known in the literature as the twin deficit hypothesis. We assess the link between the two deficits in the presence of structural breaks using the Autoregressive Distributed Lag (ARDL) model and the bootstrap causality test. Our empirical results suggest that we reject the twin deficit hypothesis over the long-run. Instead, we find support for the Ricardian equivalence hypothesis. The absence of any long-run relationship between the two variables is backed by our bootstrap causality test and our FM-OLS (Fully Modified Ordinary Least Squares) regression results. Still, we find support for the existence of a link between the two deficits in the short-run. The results from the ARDL model with breaks contrast with those in earlier studies without breaks. The latter rejected both the twin deficit and the Ricardian equivalence hypotheses.

中文翻译：

---

关于存在结构性断裂的情况下经常账户与财政失衡之间的联系：来自埃及的经验证据

摘要 本研究为埃及提供了财政和经常账户失衡之间联系的实证分析，这在文献中也被称为双赤字假设。我们使用自回归分布滞后 (ARDL) 模型和自举因果检验评估存在结构断裂时两个缺陷之间的联系。我们的实证结果表明，从长远来看，我们拒绝双赤字假设。相反，我们找到了对李嘉图等价假设的支持。我们的自举因果检验和 FM-OLS（完全修改普通最小二乘法）回归结果支持了这两个变量之间不存在任何长期关系。尽管如此，我们仍然支持短期内两种赤字之间存在联系。有中断的ARDL模型的结果与早期没有中断的研究的结果形成对比。后者拒绝了孪生赤字和李嘉图等价假设。