Prague Economic Papers 2022, 31(1):3-24 | DOI: 10.18267/j.pep.780

Budget Deficit Sustainability: An Application to Turkey

Zuhal Ergen ORCID...a, Esin Güzhan ORCID...a
a Cukurova University, Faculty of Economics and Administrative Sciences, Department of Finance, Adana, Turkey

In this study, sustainability of budget deficits in Turkey is examined empirically for the pe- riod from January 2006 to September 2020, using time series techniques based on monthly data, under the intertemporal budget constraint approach. In the analysis phase, the Johansen cointegration method was used for the long-term relationship of the series. Analysis results indicated that income and expenditure series are not cointegrated. It is concluded that budget policies for the period under consideration in Turkey are unsustainable; therefore, the applied fiscal policies should be reviewed.

Keywords: Budget deficit, sustainability, intertemporal budget constraint, Turkey
JEL classification: H30, H50, H60

Received: July 24, 2021; Revised: November 22, 2021; Accepted: December 3, 2021; Prepublished online: December 8, 2021; Published: March 1, 2022  Show citation

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Ergen, Z., & Güzhan, E. (2022). Budget Deficit Sustainability: An Application to Turkey. Prague Economic Papers, 31(1), 3-24. doi: 10.18267/j.pep.780
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