Search

Purpose: The relationship between public expenditure and revenue that determines the budget balance in the explanation of budget deficits is very important. This study aimed to examine the association between public spending and income in Turkey. Methodology: This article applies the continuous wavelet transform method (CWT) to study the relationship between government revenues and expenditures in Turkey. The study, which covers the period 2006-2020, consists of monthly data. The following four CWT tools were used in the analysis: Wavelet Power Spectrum, Cross Wavelet Power, Wavelet Coherence, and Phase Difference. Results: The results of the study, controlling taxes rather than expenditures, play a key role in reducing fiscal deficits in Turkey in the short term. It is revealed that the dynamics of the budget balance in the medium term can be explained by the spend-tax hypothesis and that the tax burden can be alleviated by spending cuts. In the long term, results were obtained that support the spend-tax hypothesis. Conclusion: The paper reveals that taxes play an important role in controlling budget deficits in the short run. It turns out that the dynamics of the budget balance can be explained in the medium term by expenditure cuts and then the tax burden can be alleviated. In the long run, implementing fiscal policies based on public spending rather than taxation will be more effective against budget deficits. [ABSTRACT FROM AUTHOR]

This study investigates the validity of Turkey's export-led growth hypothesis (ELG) with the time domain and frequency domain causality methods using quarterly data for the 1998Q1–2021Q4 period. We also test whether government expenditure is an important channel within the framework of the ELG hypothesis. The time-domain causality results indicate that the feedback and import-led growth (ILG) hypotheses are valid. The frequency-domain causality results imply that the hypothesis of the growth-led export (GLE) is valid. Therefore, the time and frequency domain causality findings indicate that the ELG hypothesis is invalid. Turkey, which has followed an export-oriented industrialization strategy since 1980, is far from successful in this policy. Therefore, policymakers need to revise Turkey's foreign trade strategy. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Financial Politic & Economic Reviews / Finans Politik & Ekonomik Yorumlar is the property of Journal of Financial Politic & Economic Reviews / Finans Politik & Ekomomik Yorumlar and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article presents a study which analysed the relationship between government expenditure and economic growth in Turkey. The researchers tested the standard bivariate version of Wagner's law. The differences of this study from earlier studies that test the Law for Turkey are that, the causal link is examined within a trivariate framework and non-interest government expenditure instead of total government expenditures is considered.

The main purpose of this paper is to investigate the relationship between tax revenue and government spending in order to make some policy suggestions on how to achieve fiscal discipline in Turkey. We have used the cointegrated vector autoregression (VAR) method along with the Granger causality test (1969). The empirical findings indicate that there is a uni-directional causality running from spending to tax revenue. In other words, our findings support the spend-and-tax hypothesis for fiscal discipline in Turkey over the period of 1975-2011. Since there is a uni-directional causality, running from government spending to tax revenue, spending restrictions are required to reduce budget deficits, and reducing government spending is a better solution than increasing tax revenue to obtain optimal fiscal discipline in Turkey. [ABSTRACT FROM AUTHOR]

Recently both empiricial and theoretical studies focus on expansionary fiscal contraction hypothesis (EFC), according to which fiscal contractions stimulate consumption and also lead to an increase in aggregate demand and output. In this paper the validity of the EFC hypothesis is tested for Turkey from 1987 to 2006 by means of structural vector autoregressive (SVAR) models. Impulse response analysis is carried out by imposing long-run restrictions on Vector Error-correction Models (VECM). Structural shocks in government expenditure, terms of trade and income are decomposed into permanent and transitory components. Long-run identifying restrictions are imposed on the effects of permanent shocks. Empirical analysis indicates that fiscal contractions are not expansionary in Turkey. Based on the findings, terms of trade and supply shocks seem to have more explanatory effect on consumption expenditure. [ABSTRACT FROM AUTHOR]

Two of the most common measures adopted by the government to stimulate the economy are increasing government borrowings and implementing tax cuts. These tax cuts are financed through increased debt. According to the Ricardian equivalence theory, the consumers will not change their current spending when they anticipate a tax increase in the future. In order to pay high taxes in the future, the government should increase its present savings. However, the extent of applicability of Ricardian equivalence could vary across nations. In this context, the present study explores the long-running relationship between domestic borrowing and private savings in Turkey. For this purpose, the researcher collected the data for key variables, gross domestic savings, and government debt, for the period of 1980–2017. The researcher used unit root, cointegration, VECM, and the Granger causality test to examine the relationships among the variables. Apart from this, ARDL regression was used in order to examine the long-term relationships among the variables. The empirical results indicate that there is presence of bidirectional causality, indicating that Ricardian equivalence is applicable in the economy. Households display a rational behavior by increasing their savings during the periods in which high government expenditure is incurred. [ABSTRACT FROM AUTHOR]