Abstract
This research note examines the impact of federal deficits on U.S. capital inflows. Expanding on the previous work of Bahmani-Oskooee and Payesteh (1994), we employ the relatively new maximum likelihood procedure developed byJohansen (1988) andjohansen andJuselius (1990) to do cointegration tests. The results find a long run relationship between budget deficits and capital inflows. In addition, findings from error-correlation modeling reveal that short-run disequilibria in financial markets are corrected very rapidly, suggesting that these markets are efficient.
Original language | English (US) |
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Pages (from-to) | 485-494 |
Number of pages | 10 |
Journal | Quarterly Review of Economics and Finance |
Volume | 36 |
Issue number | 4 |
DOIs | |
State | Published - Dec 1 1996 |
Externally published | Yes |
All Science Journal Classification (ASJC) codes
- Finance
- Economics and Econometrics