CAUSALITY BETWEEN BUDGET DEFICIT AND GROWTH WITHIN THE FRAMEWORK OF SOCIO-ECONOMIC AND POLITICAL ISSUES: A CASE OF TURKEY (2006: Q1-2015: Q3)
SOSYO-EKONOMİK VE POLİTİK SORUNLAR ÇERÇEVESİNDE BÜTÇE AÇIKLARI İLE BÜYÜME ARASINDAKİ NEDENSELLİK İLİŞKİSİ: TÜRKİYE ÖRNEĞİ (2006:Q1-2015:Q3)

Author : Zübeyir TURAN -- Ayberk Nuri BERKMAN - Abdulmenaf AKYILDIZ
Number of pages : 32-45

Abstract

The relationship between budget deficits and economic growth has become the focus of many researchers in recent years. This study aims to reveal the relationship between budget deficits and economic growth in Turkey by utilizing the Johansen Cointegration Test and Granger Causality Test methods with the data covering the period between 2006: Q1-2015: Q3. The analysis results conclude the validity of Keynesian Law and the Wagner Act in Turkey’s economy. Although there is a long-run two-way causality between budget deficits and growth in the context of Turkey's economy, it has been observed to remain unstable occasionally. Volatility of macroeconomic variables, absence of structural reforms and chronic inflation in Turkey’s economy can be considered as the main reasons for it.

Keywords

Budget Deficit, Growth, Wagner's Law, Keynes Act

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