Turkey Is The Validity Of The Twin Deficit And Economic Incidences

1

 

After 1980 Turkey accelerated the globalization policies of the world has entered a rapid process of integration. Globalization policies is limiting the role of state in the economy by foreign investors and private entrepreneurs are getting easy entrance to the country is directed mainly aimed at the entry of a free market process. Public spending increased and this spending generally tried to be financed from foreign resources. This has led to deterioration of the current account balance. Thus, the hypothesis has emerged on the twin deficit. This hypothesis assume a relationship between budget deficits and current account deficits. Theoretical framework, the traditional Keynesian thinking, budget deficits, current account deficit led, however, even if Ricardian equivalence, budget deficits and current account deficits of any relationship between the states is not.

The general purpose of the study in Turkey is the validity of the Twin Deficit Hypothesis. In this respect 1980 – 2010 period in Turkey with annual data on the effects of budget deficits, current account deficit will be examined with empirical approaches. The study co-integration of the series for a Unit Root test for stationarity analysis and statistical methods, such as Granger causality test will be used for finding the direction of causality.

The budget and foreign trade deficits in the United States that moving in the same direction in the 1980s,it forms the basis of the relationship between budget deficits and trade deficits in the present. The budget deficits cause the  current account deficits, and the two open at the same time emerging. The emergence of budget deficits with the balance of current account deficits, this situation has created a causal link between these two deficits (Erdinc, 2008: 210-211). This relationship is not only in the United States, also in many European countries and developing countries have experienced or experiencing.

In Turkey laid the foundations of the process of integration into the global economy and financial liberalization with the decisions of 24 January 1980. In this period the stabilization program aimed to minimize public deficits. This situation has created many important developments to reduce the impact of the public sector,but Turkey’s trade deficits and budget deficits continued to exist. The sensitivity to cyclical fluctuations in the countries is the greater, if a large volume of foreign trade of a country and degree of liberalization of capital movements outsourcing. In this direction increase in budget deficits and trade deficits in Turkey,the twin deficits hypothesis will inevitably be queried for Turkey.(Çelik,2008: 2-4).

In 1980 Turkey adopted the an outward-oriented growth model faced with higher foreign trade deficits. Increasing the external deficits have led to the problem of financing and  in the periods of 1994 and 2001 two major financial crises have emerged. As a result of this crisis were higher devaluations. The main cause of the financial crisis in Turkey, not for the purpose of investing in funds that is called as the hot money movements is that sudden and violent flow of funds into the country.

In this period, macroeconomic policies implemented in the country observed that a significant share of this type of crises. The main cause of the structural problems of economic crises in Turkey and the international mobility of capital. The most important source of structural indicators; public deficits, economic recession, the foreign trade balance deficits, exchange rate movements in the sudden and high volatility. The most important indicator of speculative international capital mobility funds originating from the current.

Also in the period after 1980, increases in infrastructure spending for the purpose of growth and development, subsidies to certain segments of society, reasons such as the general and local elections often populist spending increasing amounts of debt has increased. So the governments have searched remedies to get rid of the crisis in The Keynesian Economic Policies. As state intervention in the economy increased budget deficits. The debt tried to be closed by taking the external debt. The payment of debt to debt and this is called twin deficit of liabilities. Twin deficit phenomenon of macroeconomic policies in Turkey, especially in times of crisis draws attention to the importance for Turkey (Dogan: 500).

In the economic literature, twin deficits hypothesis in studies on the subject reveals the existence of a positive relation between budget deficits and current account deficits. However, the economic literature is available in two different views forming this hypothesis. These are the traditional Keynesian theory and Ricardian Equivalence Hypothesis. However, the economic literature is available in two different views forming this hypothesis. These are the traditional Keynesian theory and Ricardian Equivalence Hypothesis. The first of these is the traditional Keynesian theory,it claims a strong correlation between budget deficits and current account deficits.   This theory that  reference to the IS-LM model, if the increase in the public budget deficits refers to the increase of current account deficits. On the other hand by the Ricardian Equivalence Hypothesis, no correlation between budget deficits and current account deficits are not in question. Consequently in this hypothesis, twin deficits hypothesis is not valid. As seen from the studies; the economics literature, a large number of researchers, using different models and methods have analyzed the relationship between budget deficits and current account deficits.

However, the presence and direction of causality of the relationship is still not able to reach a consensus. Studies conducted in Turkey, although there are many studies on the subject a common consensus has been reached on the judgment. The main reasons has been claimed as for this is different from the rest of the economic characters of the selected country groups and the selected data sets due to the fact that over the years and different from each other in terms of content (Yücel and Ata, 2003: 2-4).

Turkey’s economy is seen the budget deficit and the current account deficit for many years. The purpose of this study suggest that, between them whether the causal link and the validity of the twin deficits hypothesis and to examine the relationship between variables.

KAYNAKÇA

ALTAY,O. ve GÖK,B. (2007). Türkiye de İkiz Açıklar Hipotezi: 1989-2005,TİSK Akademi Dergisi, 2(3),186-196.

ÇELİK S., DENİZ P. ve EKEN S, (2008). Eşbütünleşme Analiziyle Altı Gelişmekte Olan Ülke İçin İkiz Açıklar Hipotezi,DEU iktisat Bölümü, 2. Ulusal İktisat Kongresi, Şubat 2008

DOĞAN B. Türkiye Ekonomisinde Kriz Öncü Göstergeleri ve İkiz Açık, Journal of Azerbaijani Studies, 500-521.

ERDİNÇ Z. (2008). İkiz Açıklar Hipotezinin Türkiye’de 1950 – 2005 Yılları Arasında Eşbütünleşme Analizi

YILMAZ, E. (2002).İkiz Açık Teorisi: Türkiye’nin 1980-2001 Dönemi Bütçe Açıkları ve Dış Ticaret Açıkları Üzerine Bir Nedensellik Araştırması, İstanbul Üniversitesi İktisat Fakültesi Maliye Araştırma Merkezi Konferansları, 41.seri

 

 

 

 

1 Yorum
  1. merve says

    merhaba, “Turkey Is The Validity Of The Twin Deficit And Economic Incidences” ve “Turkey And Twin Deficit Theory” makalelerinizi bir araştırma ödevimdeki makalelere eklemek istiyorum.Makalelerin orijinal türkçe hali bulunmakta mıdır? sormak istedim.teşeşkkürler…

Cevap Yaz

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.