The empirical results show that Current account deficits to cause fiscal deficits but not vice versa. This supports the hypothesis that it is highly likely for developing countries to show high correspondence between those deficits. Moreover, this study identifies several macroeconomic mediating variables i.e. interest rate, exchange rates, and Gross Domestic Products that might be influencing both Current accounts and fiscal deficits. To be more specific, empirical results indicate that movements in the interest rate variable jointly causing both deficits.
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