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Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey

Metin BAYRAK; Ömer ESEN.

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Abstract
There are generally two different views that explain development process of Twin deficits. The first approach that tries to explain “Twin Deficits Hypothesis” is Conventional Keynesian Approach and the other one is Ricardian Equivalence Approach. While the Conventional Keynesian proposition claims that budget deficits led to current account deficits, on the other hand the Ricardian Equivalence Hypothesis claims that there is no relationship between the budget deficits and current account deficits. In this paper the relationship between foreign trade balance and current account balance is researched by using annual data for 1975 and 2010 periods in Turkey. In order to search the direction and size of the association between analyzed variables, Johansen cointegration and error correction model have been employed. The empirical findings of the study reveal that for the concerning period, it is found that there is a relationship between budget deficits and current account deficits in both the short and long run. These results support the Conventional Keynesian Theory and refuse the Ricardian Equivalence Hypothesis.

Key words: Twin Deficits, Current Account Balance, Budget Balance, Cointegration Analysis, Error Correction Model. JEL Classification: C53, F32, H62



BÜTÇE AÇIKLARININ CARİ İŞLEMLER DENGESİ ÜZERİNE ETKİLERİ: İKİZ AÇIKLAR HİPOTEZİNİN TÜRKİYE AÇISINDAN DEĞERLENDİRİLMESİ

Özet
İkiz açıkların oluşma sürecini açıklayan genel olarak iki farklı görüş bulunmaktadır. “İkiz Açık Hipotezini” açıklamaya çalışan yaklaşımlardan ilki “Geleneksel Keynesyen Yaklaşımı”, diğeri ise “Ricardian Denkliği Yaklaşımı” dır. Geleneksel Keynesyen öngörü, bütçe açıklarının cari işlem açıklarına yol açacağını ileri sürerken, Ricardian denkliği hipotezi de bütçe açıkları ile cari işlem açıkları arasında her hangi bir ilişkinin olmadığını iddia eder. Bu çalışmada, Türkiye’de bütçe dengesi ile cari işlemler dengesi arasındaki ilişki, 1975 ile 2010 dönemi arasında yıllık veriler kullanılarak araştırılmıştır. Ele alınan değişkenler arasındaki ilişkinin yönü ve büyüklüğünü araştırmak üzere Johansen eşbütünleşme ve hata düzeltme modeli uygulanmıştır. Elde edilen ampirik sonuçlara göre, inceleme dönemi için, bütçe açıkları ile cari işlem açıkları arasında kısa ve uzun dönemli bir ilişki olduğu sonucuna varılmıştır. Bu sonuçlar, Geleneksel Keynesyen Yaklaşımı destekler ve Ricardian Denkliği Yaklaşımı reddeder yöndedir.

Anahtar Kelimeler: İkiz Açıklar, Cari İşlem Dengesi, Bütçe Dengesi, Eşbütünleşme Analizi, Hata Düzeltme Modeli. JEL Sınıflaması: C53, F32, H62.


 
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How to Cite this Article
Pubmed Style

BAYRAK M, ESEN O. [Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]. Ekonomik Yaklasim. 2012; 23(82): 23-49. Turkish. doi:10.5455/ey.20001


Web Style

BAYRAK M, ESEN O. [Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]. http://www.ekonomikyaklasim.org/?mno=34382 [Access: December 13, 2017]. Turkish. doi:10.5455/ey.20001


AMA (American Medical Association) Style

BAYRAK M, ESEN O. [Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]. Ekonomik Yaklasim. 2012; 23(82): 23-49. Turkish. doi:10.5455/ey.20001



Vancouver/ICMJE Style

BAYRAK M, ESEN O. [Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]. Ekonomik Yaklasim. (2012), [cited December 13, 2017]; 23(82): 23-49. Turkish. doi:10.5455/ey.20001



Harvard Style

BAYRAK, M. & ESEN, O. (2012) [Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]. Ekonomik Yaklasim, 23 (82), 23-49. Turkish. doi:10.5455/ey.20001



Turabian Style

BAYRAK, Metin, and Omer ESEN. 2012. [Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]. Ekonomik Yaklasim, 23 (82), 23-49. Turkish. doi:10.5455/ey.20001



Chicago Style

BAYRAK, Metin, and Omer ESEN. "[Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]." Ekonomik Yaklasim 23 (2012), 23-49. Turkish. doi:10.5455/ey.20001



MLA (The Modern Language Association) Style

BAYRAK, Metin, and Omer ESEN. "[Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]." Ekonomik Yaklasim 23.82 (2012), 23-49. Print.Turkish. doi:10.5455/ey.20001



APA (American Psychological Association) Style

BAYRAK, M. & ESEN, O. (2012) [Effects of Budget Deficit on Current Account Balance: Analysis of Twin Deficits Hypothesis in Case of Turkey]. Ekonomik Yaklasim, 23 (82), 23-49. Turkish. doi:10.5455/ey.20001



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