Twin Deficit Assumptions: A Case Study of Pakistan (Cab from 2000 to 2023) and (FD from 2008 to 2024)

Abstract

The aim of this article is to investigate the link between fiscal deficit and current account deficit which is the high rate of fiscal deficit budget and commonly known as twin deficit or deficits assumptions in the Pakistani economy (Khalil Mudassar, Amjad Fakher, Sajid Ali & Fozia Sarwar 2013); present economy below growing stress in the fiscal and foreign fronts as a output of huge fiscal deficit & current account balance deficit. The error rectification specification is used to find evidence of long-running connection from fiscal deficit to current account deficit. The analysis results suggest that the current account balance deficit can be determined but the fiscal deficit budget balance is very challenging and from deficit to growth rate but through strong policies of the government for imposing direct and indirect taxes which will be strong can reduce the fiscal deficit and growing towards the growth rate of the economy.