The Relationship between Budget Deficits and Capital Inflows: Further Econometric Evidence N. R. VASUDEVA MURTHY and JOSEPH M. PHILLIPS Creighton University This research note examines the impact offederal deficits on U.S. capital inflows. Expanding on the previous work of Bahmani-Oskooee and Payesteh(1994), we employ the relatively new maximum likelihood procedure developed byJ o h ansen (I 988) and Johansen andJuselius (I 990) to do cointegration tests. The results find a long ru ...