The Twin Deficits Phenomenon in Some MENA Countries

The main purpose of this paper is analyses the short and long run relationship between budget deficit and trade deficit in some MENA countries. The data cover the period from 1971-2000 (and for I.R. IRAN 1959-2003).The relationship between these variables will be analyses in short and long run by using Johansen co-integration tests, ECM, and Granger causality test. The empirical evidence provides support to the view of Ricardian Equivalence in Iran (Islamic Rep.), Jordan, Kuwait, Morocco, Oman, and Tunisia. But, the empirical evidence proves the validity of Keynesian proposition (conventional view) only Egypt, Bahrain, Oman, and Turkey.