South Asian Countries Need Fiscal Reforms for Economic Stability.
The article looked at the relationship between government budget deficits and trade deficits in South Asian countries like Bangladesh, India, Pakistan, and Sri Lanka. They used data from 1981 to 2014 and found no evidence of a strong connection between the two deficits in the long term. Only Bangladesh showed a short-term link between budget deficits and trade deficits. India and Pakistan support the idea that people adjust their savings based on government spending, while the Feldstein Horioka Puzzle was not seen in these countries, suggesting high international capital movement. The study suggests that South Asian countries need to improve their fiscal and trade policies and better integrate their capital markets to stabilize their economies.