An empirical analysis of sustainability of Fiji¿s trade deficits

This paper investigates the sustainability of Fijiÿs trade deficits in the context of recent, unprecedented fiscal expansion and private sector credit. Employing various tests for determining structural break in the time series and cointegration test, the study results support the existence of a long run equilibrium relationship between exports and imports in Fiji implying that trade deficits are only a short-term phenomena and hence, sustainable in the long run