A PVAR MODEL BUILT ON THE RICARDIAN APPROACH TO DEFICITS IN CENTRAL AND EASTERN EUROPE

In the current times, the issue of the deficits became very problematic for the economists, as well as for the practitioners and theoreticians. The purpose of this paper consists in the construction of a Panel VAR model, which has the role to test the Ricardian approach to deficits in several countries from Central and Eastern Europe. The analyzed countries are Austria, Czech Republic, Hungary, Bulgaria, Romania and Ukraine and the time interval starts in 1998 and it ends in 2013. The used variables are the gross national saving rate and the budget balance for each of the six countries. Our results show that in this geographical-economical area, the Ricardian approach to deficits does not hold as a valid macroeconomic theory.