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An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey

mer Faruk ALTUN, Celil AYDIN.

Abstract
Armey Curve, propounded by Richard Armey, is one of the tools that developed to demonstrate the role of the state in the economic process. The basic logic behind the Armey Curve is that the relationship between public spending and gross domestic product (GDP) is positive up to a certain point, thereafter the relationship becomes negative. According to Friedman (1997), the government has an important role in a free and open society. It is emphasized that, average contribution of the public sector in the economy is positive, but as the public share of national income increases from 15% to 50% the marginal contribution of the public sector will be negative. Therefore, Friedman advocates that based on development level of countries, the optimal level of public spending should be between 15% and 50%. In this article, Friedmans hypothesis is tested for Turkish economy using the data of the period 1975-2010 by the help of econometric timeseries analysis, and Armey Curve is evaluated whether it is valid for total public expenditure and expenditure components or not. Empirical findings confirmed that there is a relationship as "inverse U" between economic growth and other expenditure components except public investment expenditure. Moreover, the optimal level of total public expenditure for Turkish economy is calculated as 16% of GDP. This ratio is below the level of 26.6% which is the ratio of 2010 public expenditure to GDP. In this case, one of the macroeconomic policy proposals can be the reduction of the public expenditures in Turkish economy.

Key words: Public Sector, Armey Curve, Friedman\'s Hypothesis, Co-integration. JEL Classification: C10, C51, H50, O40.



TRKYE'DE KAMU SEKTR BYKL VE EKONOMK BYME LKSNN AMPRK ANALZ

Özet
Richard Armey tarafndan ortaya atlan Armey Erisi devletin ekonomik sreteki roln ortaya koymak iin gelitirilen aralardan biridir. Armey erisi kamu harcamalaryla Gayrisafi yurtii hasla (GSYH) arasnda bir noktaya kadar pozitif, bir noktadan sonra negatif iliki oluu eklindeki temel mant yanstmaktadr. Friedmana (1997) gre zgr ve ak bir toplumda devlet nemli bir role sahiptir. Kamu sektrnn ekonomiye ortalama katksnn pozitif olduu, ancak bu payn ulusal gelirin %15inden %50sine gidildike marjinal katksnn negatif olacan vurgulamaktadr. Dolaysyla Friedman kamu harcamalarnn optimal dzeyinin, lkelerin gelimilik dzeylerine gre, GSYHnn %15 ile %50si arasnda olmas gerektiini savunmaktadr. almada bu hipotez 1975-2010 dnemi verilerinden hareketle ve ekonometrik zaman serileri analizinden yararlanarak Trkiye ekonomisi iin test edilmi ve toplam kamu harcamalar ve harcama kategorileri iin Armey erisinin geerli olup olmadna baklmtr. Ampirik bulgular kamu yatrm harcamalar dnda dier harcama kategorileri ve ekonomik byme arasnda ters U biiminde bir ilikinin olduunu dorulamtr. Ayrca Trkiye ekonomisi iin toplam kamu harcamalarnn optimal dzeyi, GSYHnn %16s dzeyinde hesaplanmtr. Bu oran Trkiye ekonomisi iin 2010 yl kamu harcamalarnn/GSYHya oran olan %26.6 dzeyinin altndadr. Bu durumda sunulabilecek makroekonomik politika nerilerinden biri Trkiyede kamu harcamalarnn azaltlmas gereidir.

Anahtar Kelimeler: Kamu sektr, Armey erisi, Friedman hipotezi, E-btnleme. JEL Snflamas: C10, C51, H50, O40.


 
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How to Cite this Article
Pubmed Style

ALTUNC OF, AYDIN C. [An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]. Ekonomik Yaklasim. 2012; 23(82): 79-98. Turkish. doi:10.5455/ey.20003


Web Style

ALTUNC OF, AYDIN C. [An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]. http://www.ekonomikyaklasim.org/?mno=34384 [Access: February 23, 2018]. Turkish. doi:10.5455/ey.20003


AMA (American Medical Association) Style

ALTUNC OF, AYDIN C. [An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]. Ekonomik Yaklasim. 2012; 23(82): 79-98. Turkish. doi:10.5455/ey.20003



Vancouver/ICMJE Style

ALTUNC OF, AYDIN C. [An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]. Ekonomik Yaklasim. (2012), [cited February 23, 2018]; 23(82): 79-98. Turkish. doi:10.5455/ey.20003



Harvard Style

ALTUNC, O. F. & AYDIN, C. (2012) [An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]. Ekonomik Yaklasim, 23 (82), 79-98. Turkish. doi:10.5455/ey.20003



Turabian Style

ALTUNC, Omer Faruk, and Celil AYDIN. 2012. [An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]. Ekonomik Yaklasim, 23 (82), 79-98. Turkish. doi:10.5455/ey.20003



Chicago Style

ALTUNC, Omer Faruk, and Celil AYDIN. "[An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]." Ekonomik Yaklasim 23 (2012), 79-98. Turkish. doi:10.5455/ey.20003



MLA (The Modern Language Association) Style

ALTUNC, Omer Faruk, and Celil AYDIN. "[An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]." Ekonomik Yaklasim 23.82 (2012), 79-98. Print.Turkish. doi:10.5455/ey.20003



APA (American Psychological Association) Style

ALTUNC, O. F. & AYDIN, C. (2012) [An Empirical Analysis on the Relationship between Public Sector Size and Economic Growth in Turkey]. Ekonomik Yaklasim, 23 (82), 79-98. Turkish. doi:10.5455/ey.20003



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