The twin deficits in the ASEAN countries

The aim of this study is to assess the relationship between trade balance and public budget in the ASEAN countries. Using yearly data for the period between 1980 and 2012 in ten member states, a long-run relationship between current account balance and net lending emerge, both in ASEAN-6 and in ASEAN-10 countries. Granger causality analysis shows the predominance of the Ricardian equivalence in the South-Asia area. Moreover, mixture models produce four homogeneous clusters. Finally, convergence measures show interesting results.