A Review of the State-of-the-Art Research on the Twin Deficit Hypothesis.

The aim of this paper is to find the most important patterns in published papers on the twin deficits. The research methodology includes text-mining analysis covering all the relevant Research Papers in Economics (RePEc) works. It turned out that Ricardian equivalence and the Mundell-Fleming approach dominate twin deficit research, especially in developed countries. The current account targeting hypothesis and bi-directional causality are confirmed mainly in developing countries. As regards the methodology, the most used are cointegration techniques and Granger causality testing. The percentage of papers proving Ricardian equivalence did not change during the analysed period, while the percentage of those confirming the Mundell-Fleming model decreased when using more recent data. [ABSTRACT FROM AUTHOR]