The relationship between the current operations account deficit and the state budget deficit in Ukraine: an empirical analysis

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The purpose of this research is to investigate the causal relationship between the current account deficit (CAD) and the government budget deficit (GBD) in Ukraine using an empirical analysis.The authors employ a quantitative approach using quarterly data from 2002 to 2018. They first de-seasonalize the data using a moving average method to account for seasonal fluctuations. Then, they apply the Pearson correlation test to examine the correlation between the CAD and the GBD.The findings of the study indicate a positive correlation between the CAD and the GBD in Ukraine. The Pearson correlation coefficient is 0.4, suggesting a moderate positive relationship between the two variables. However, the correlation test does not establish causality.The results of this research can be used to inform policy decisions aimed at addressing the twin deficits in Ukraine. The authors suggest that policymakers should consider implementing fiscal consolidation measures to reduce the GBD, which could potentially lead to a narrowing of the CAD.The study provides evidence of a positive correlation between the CAD and the GBD in Ukraine. While causality cannot be determined from the correlation analysis, the findings suggest that there may be a link between the two deficits. Further research is needed to explore the causal relationship between the CAD and the GBD in more depth.● The study focuses on the Ukrainian economy, but the findings may have implications for other countries facing similar challenges.● The authors acknowledge that other factors may also influence the CAD and the GBD, and they call for further research to investigate these factors.● The study is limited by the availability of data and the use of a relatively short period.Overall, the research provides a valuable contribution to understanding the relationship between the CAD and the GBD in Ukraine. The findings have implications for policymakers and researchers interested in addressing the twin deficits in Ukraine and other countries.