Greek fiscal deficits found to drive trade imbalances, impacting economy.
The article examines the connection between government budget deficits and trade deficits in Greece from 1960 to 2014. By analyzing yearly data, the researchers found a long-term relationship between the two deficits. They discovered that the budget deficit influences the trade deficit, supporting the idea of twin deficits. This aligns with the theory that fiscal deficits can lead to current account deficits.