INTERDEPENDENCE BETWEEN BUDGET AND CURRENT ACCOUNT DEFICITS IN POLAND, 1999-2009

The article brings a theoretical and empirical examination of the relationships between state budget deficits and current account deficits in Poland. The paper consists of three parts. The first part explains the relationship between budget deficits and current account deficits in the light of economic theory. The second part gives a brief overview of empirical studies on the subject. The third part presents the results of author's own econometric analysis of the relationship between budget and current account deficits in Poland in the period 1999-2009, based on quarterly data. The results of the investigation clearly point at the existence of bi-directional relationships between fiscal and current account deficits in Poland in the analysed period. At the same time, it is revealed that the impact of current account deficit on budget deficit has been stronger than the impact of budget deficit on current account deficit.