Research Article
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Year 2022, Volume: 7 Issue: 2, 425 - 443, 31.12.2022
https://doi.org/10.25229/beta.1206552

Abstract

References

  • Altunakar, Ş., & Buyrukoğlu, S. (2020). Türkiye’de Abrams ve Armey eğrilerinin geçerliliği. Elektronik Sosyal Bilimler Dergisi, 19(76), 1862–1878. https://doi.org/10.17755/esosder.730089
  • Altunç, Ö., & Aydın, C. (2012). Türkiye’de kamu sektörü büyüklüğü ve ekonomik büyüme ilişkisinin ampirik analizi. Ekonomik Yaklaşım, 23(82), 79–98. https://doi.org/http://dx.doi.org/10.5455/ey.20003
  • Altunc, O. F., & Aydın, C. (2013). The relationship between optimal size of government and economic Growth: empirical evidence from Turkey, Romania and Bulgaria. Procedia - Social and Behavioral Sciences, 92, 66–75. https://doi.org/10.1016/j.sbspro.2013.08.639
  • Armey, D. (1995). The freedom revolution. In Regnery Publishing.
  • Aydin, C., & Esen, Ö. (2019). Does too much government spending depress the economic development of transition economies? Evidences from dynamic panel threshold analysis. Applied Economics, 51(15), 1666–1678. https://doi.org/10.1080/00036846.2018.1528335
  • Barro, R. J. (1989). A cross-country study of growth, saving, and government (No. w2855; NBER Working Paper). https://ssrn.com/abstract=227242
  • Barro, R. J. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy. Journal of Political Economy, 98(S5), 103–125.
  • Bayrak, R. (2019). Does the optimal size of defense expenditure exist? An empirical study on Turkey. Savunma Bilimleri Dergisi The Journal of Defense Sciences, 18(1), 135–160. https://doi.org/https://doi.org/10.17134/khosbd.561221
  • Bayrak, R. (2021). How does the development level of countries affect optimal size of government: An empirical study with panel data analysis. Nevşehir Hacı Bektaş Veli Üniversitesi SBE Dergisi, 11(1), 391–405. https://doi.org/10.30783/nevsosbilen.870485
  • Binay, M. (2019). OECD Ülkelerinde sağlık harcamalarının ekonomik büyümeyi maksimize edecek şekilde optimizasyonu. Sosyal Güvenlik Dergisi, 9(2), 449–476. https://doi.org/10.32331/sgd.658899
  • Blomquist, J., & Westerlund, J. (2016). Panel bootstrap tests of slope homogeneity. Empirical Economics, 50(4), 1359–1381. https://doi.org/10.1007/s00181-015-0978-z
  • Bozma, G., Başar, S., & Eren, M. (2019). Investigating validation of armey curve hypothesis for G7 countries using ARDL model. Doğuş Üniversitesi Dergisi, 20(1), 49–59. https://doi.org/10.31671/dogus.2019.416
  • Dada, M. A., Posu, S. M. A., Adedeji, O. A., & Ojo, O. T. (2021). Government size and economic growth in ECOWAS sub-region: A test of the non-monotonic hypothesis. Ife Social Sciences Review, 29(1), 100–116. https://issr.oauife.edu.ng/index.php/issr/article/view/128
  • di Matteo, L., & Barbiero, T. (2018). Economic growth and the public sector: A comparison of Canada and Italy, 1870-2013. Review of Economic Analysis, 10(3), 221–243. https://doi.org/10.15353/rea.v10i3.1445
  • Eberhardt, M., & Bond, S. (2009). Cross-section dependence in nonstationary panel models: a novel estimator. https://EconPapers.repec.org/RePEc:pra:mprapa:17692
  • Eberhardt, M., & Teal, F. (2010). Productivity analysis in global manufacturing production. In Eco-nomics Series, 2010 (Issue 515). https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.983.4340&rep=rep1&type=pdf
  • Eberhardt, M., & Teal, F. (2011). Econometrics for grumblers: A new look at the literature on cross-country growth empirics. Journal of Economic Surveys, 25(1), 109–155. https://doi.org/10.1111/j.1467-6419.2010.00624.x
  • Forte, F., & Magazzino, C. (2011). Optimal size government and economic growth in EU countries. Economia Politica, 28(3), 295–322. https://doi.org/10.1428/35913
  • Greene, W. H. (2012). Econometric analysis. In Prentice Hall (7th ed.). Prentice Hall.
  • Günalp, B. (2003). Gelişmekte olan ülkelerde optimal devlet hacmi. Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 21(2), 1–20. https://dergipark.org.tr/en/pub/huniibf/issue/7881/103557
  • Hajamini, M., & Falahi, M. A. (2014). The nonlinear impact of government consumption expenditure on economic growth: Evidence from low and low-middle income countries. Cogent Economics and Finance, 2(1). https://doi.org /10.1080/23322039.2014.948122
  • Harb, N., & Hall, S. G. (2019). Does foreign aid play a role in the maintenance of economic growth? A non-linear analysis. The Quarterly Review of Economics and Finance, 73, 192–204. https://doi.org/https://doi.org/10.1016/j.qref.2018.12.002
  • Hok, L., Jariyapan, P., & Buddhawongsa, P. (2014). Optimal size of government spending: Empirical evidence from eight countries in southeast asia. The Empirical Econometrics and Quantitative Economics Letters, 3(4), 31–44.
  • Jain, M., Nagpal, A., & Jain, A. (2021). Government size and economic growth: An empirical examination of selected emerging economies. South Asian Journal of Macroeconomics and Public Finance, 10(1), 7–39. https://doi.org/10.1177/2277978720979889
  • Josheski, D., Lazarov, D., & Koteski, C. (2012). Analysis of the optimal size of the government consumption. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1880905
  • Karras, G. (1996). The optimal government size: Further international evidence on the productivity of government services. Economic Inquiry, 34(2), 193–203. https://doi.org/10.1111/j.1465-7295.1996.tb01372.x
  • Karras, G. (1997). On the optimal government size in Europe: Theory and empirical evidence. Manchester School, 65(3), 280–294. https://doi.org/10.1111/1467-9957.00057
  • Lich, H. K. (2019). The optimal public expenditure in developing countries. VNU Journal of Science: Economics and Business, 35(2), 13–23. https://doi.org/10.25073/2588-1108/vnueab.4228
  • Nouira, R., & Kouni, M. (2021). Optimal government size and economic growth in developing and MENA countries: A dynamic panel threshold analysis. Middle East Development Journal, 13(1), 59–77. https://doi.org/10.1080/17938120.2021.1898231
  • Pamuk, Y., & Dündar, U. (2016). Kamu harcamalarının optimal boyutu: Türkiye örneği. Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 34(3), 23–50. https://doi.org/10.17065/huniibf.259128
  • Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels (No. 1240; IZA Discussion Paper).
  • Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265–312. https://doi.org/https://doi.org/10.1002/jae.951
  • Pevcin, P. (2004). Economic output and the optimal size of government. Economic and Business Review for Central and South - Eastern Europe, 6(3), 213–227. https://search.proquest.com/docview/219420425?accountid=14681
  • Rahn, R., & Fox, H. (1996). What is the optimal size of government? Vernon K. Krieble Foundation. Scully, G. W. (1994). What is the Optimal Size of Government in the US? (No. 188). http://www.ncpathinktank.org/pdfs/st188.pdf
  • Scully, G. W. (1995). The “growth tax” in the United States. Public Choice, 85(1–2), 71–80. https://doi.org/10.1007/BF01047902
  • Şen, H., & Kaya, A. (2019). Alternatif göstergeler bazında Türkiye’de optimal kamu kesimi büyüklüğünün tahmini. Bankacılar, 30(109), 49–81. http://search/yayin/detay/354676
  • Turan, T. (2014). Optimal size of government in Turkey. International Journal of Economics and Financial Issues, 4(2), 286–294.
  • Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. In Booksgooglecom (1st ed., Issue 2).
  • Yamak, R., & Erdem, H. F. (2018). Türkiye ekonomisinde Armey eğrisi geçerli midir? Uluslararası İktisadi ve İdari İncelemeler Dergisi, Prof. Dr. Harun TERZİ Özel Sayısı, 335–346. https://doi.org/10.18092/ulikidince.442807
  • Yüksel, C. (2020). The size of the public sector and the armey curve: The case of Turkey. In Critical Debates in Public Finance (pp. 137–154). Peter Lang AG.

Testing the Armey Curve Hypothesis in Turkey: Evidence from the Provincial Data

Year 2022, Volume: 7 Issue: 2, 425 - 443, 31.12.2022
https://doi.org/10.25229/beta.1206552

Abstract

This study aims to empirically test the Armey Curve hypothesis (optimal government size) for Turkey with panel data consisting of 81 provinces and 17 years. In this context, a quadratic model has been established in which economic growth is the dependent variable, and public expenditures are the independent variable. AMG estimates obtain the optimal size of public expenditures. The results indicate that the optimal level of public expenditures is 25.2%. Moreover, province-specific findings provide that the Armey curve is valid in 16 provinces, and the critical point of the curve takes values ranging from 12%(Istanbul) to 46%(Elazig). Considering the average volume of public expenditures is 31.6% throughout the panel, it is concluded that the expenditures exceed the optimal level. These results show that public expenditures are in the region of diminishing returns. Therefore, in order to maximize the growth rate, public expenditures should be reduced to an optimal level.

References

  • Altunakar, Ş., & Buyrukoğlu, S. (2020). Türkiye’de Abrams ve Armey eğrilerinin geçerliliği. Elektronik Sosyal Bilimler Dergisi, 19(76), 1862–1878. https://doi.org/10.17755/esosder.730089
  • Altunç, Ö., & Aydın, C. (2012). Türkiye’de kamu sektörü büyüklüğü ve ekonomik büyüme ilişkisinin ampirik analizi. Ekonomik Yaklaşım, 23(82), 79–98. https://doi.org/http://dx.doi.org/10.5455/ey.20003
  • Altunc, O. F., & Aydın, C. (2013). The relationship between optimal size of government and economic Growth: empirical evidence from Turkey, Romania and Bulgaria. Procedia - Social and Behavioral Sciences, 92, 66–75. https://doi.org/10.1016/j.sbspro.2013.08.639
  • Armey, D. (1995). The freedom revolution. In Regnery Publishing.
  • Aydin, C., & Esen, Ö. (2019). Does too much government spending depress the economic development of transition economies? Evidences from dynamic panel threshold analysis. Applied Economics, 51(15), 1666–1678. https://doi.org/10.1080/00036846.2018.1528335
  • Barro, R. J. (1989). A cross-country study of growth, saving, and government (No. w2855; NBER Working Paper). https://ssrn.com/abstract=227242
  • Barro, R. J. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy. Journal of Political Economy, 98(S5), 103–125.
  • Bayrak, R. (2019). Does the optimal size of defense expenditure exist? An empirical study on Turkey. Savunma Bilimleri Dergisi The Journal of Defense Sciences, 18(1), 135–160. https://doi.org/https://doi.org/10.17134/khosbd.561221
  • Bayrak, R. (2021). How does the development level of countries affect optimal size of government: An empirical study with panel data analysis. Nevşehir Hacı Bektaş Veli Üniversitesi SBE Dergisi, 11(1), 391–405. https://doi.org/10.30783/nevsosbilen.870485
  • Binay, M. (2019). OECD Ülkelerinde sağlık harcamalarının ekonomik büyümeyi maksimize edecek şekilde optimizasyonu. Sosyal Güvenlik Dergisi, 9(2), 449–476. https://doi.org/10.32331/sgd.658899
  • Blomquist, J., & Westerlund, J. (2016). Panel bootstrap tests of slope homogeneity. Empirical Economics, 50(4), 1359–1381. https://doi.org/10.1007/s00181-015-0978-z
  • Bozma, G., Başar, S., & Eren, M. (2019). Investigating validation of armey curve hypothesis for G7 countries using ARDL model. Doğuş Üniversitesi Dergisi, 20(1), 49–59. https://doi.org/10.31671/dogus.2019.416
  • Dada, M. A., Posu, S. M. A., Adedeji, O. A., & Ojo, O. T. (2021). Government size and economic growth in ECOWAS sub-region: A test of the non-monotonic hypothesis. Ife Social Sciences Review, 29(1), 100–116. https://issr.oauife.edu.ng/index.php/issr/article/view/128
  • di Matteo, L., & Barbiero, T. (2018). Economic growth and the public sector: A comparison of Canada and Italy, 1870-2013. Review of Economic Analysis, 10(3), 221–243. https://doi.org/10.15353/rea.v10i3.1445
  • Eberhardt, M., & Bond, S. (2009). Cross-section dependence in nonstationary panel models: a novel estimator. https://EconPapers.repec.org/RePEc:pra:mprapa:17692
  • Eberhardt, M., & Teal, F. (2010). Productivity analysis in global manufacturing production. In Eco-nomics Series, 2010 (Issue 515). https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.983.4340&rep=rep1&type=pdf
  • Eberhardt, M., & Teal, F. (2011). Econometrics for grumblers: A new look at the literature on cross-country growth empirics. Journal of Economic Surveys, 25(1), 109–155. https://doi.org/10.1111/j.1467-6419.2010.00624.x
  • Forte, F., & Magazzino, C. (2011). Optimal size government and economic growth in EU countries. Economia Politica, 28(3), 295–322. https://doi.org/10.1428/35913
  • Greene, W. H. (2012). Econometric analysis. In Prentice Hall (7th ed.). Prentice Hall.
  • Günalp, B. (2003). Gelişmekte olan ülkelerde optimal devlet hacmi. Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 21(2), 1–20. https://dergipark.org.tr/en/pub/huniibf/issue/7881/103557
  • Hajamini, M., & Falahi, M. A. (2014). The nonlinear impact of government consumption expenditure on economic growth: Evidence from low and low-middle income countries. Cogent Economics and Finance, 2(1). https://doi.org /10.1080/23322039.2014.948122
  • Harb, N., & Hall, S. G. (2019). Does foreign aid play a role in the maintenance of economic growth? A non-linear analysis. The Quarterly Review of Economics and Finance, 73, 192–204. https://doi.org/https://doi.org/10.1016/j.qref.2018.12.002
  • Hok, L., Jariyapan, P., & Buddhawongsa, P. (2014). Optimal size of government spending: Empirical evidence from eight countries in southeast asia. The Empirical Econometrics and Quantitative Economics Letters, 3(4), 31–44.
  • Jain, M., Nagpal, A., & Jain, A. (2021). Government size and economic growth: An empirical examination of selected emerging economies. South Asian Journal of Macroeconomics and Public Finance, 10(1), 7–39. https://doi.org/10.1177/2277978720979889
  • Josheski, D., Lazarov, D., & Koteski, C. (2012). Analysis of the optimal size of the government consumption. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1880905
  • Karras, G. (1996). The optimal government size: Further international evidence on the productivity of government services. Economic Inquiry, 34(2), 193–203. https://doi.org/10.1111/j.1465-7295.1996.tb01372.x
  • Karras, G. (1997). On the optimal government size in Europe: Theory and empirical evidence. Manchester School, 65(3), 280–294. https://doi.org/10.1111/1467-9957.00057
  • Lich, H. K. (2019). The optimal public expenditure in developing countries. VNU Journal of Science: Economics and Business, 35(2), 13–23. https://doi.org/10.25073/2588-1108/vnueab.4228
  • Nouira, R., & Kouni, M. (2021). Optimal government size and economic growth in developing and MENA countries: A dynamic panel threshold analysis. Middle East Development Journal, 13(1), 59–77. https://doi.org/10.1080/17938120.2021.1898231
  • Pamuk, Y., & Dündar, U. (2016). Kamu harcamalarının optimal boyutu: Türkiye örneği. Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 34(3), 23–50. https://doi.org/10.17065/huniibf.259128
  • Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels (No. 1240; IZA Discussion Paper).
  • Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265–312. https://doi.org/https://doi.org/10.1002/jae.951
  • Pevcin, P. (2004). Economic output and the optimal size of government. Economic and Business Review for Central and South - Eastern Europe, 6(3), 213–227. https://search.proquest.com/docview/219420425?accountid=14681
  • Rahn, R., & Fox, H. (1996). What is the optimal size of government? Vernon K. Krieble Foundation. Scully, G. W. (1994). What is the Optimal Size of Government in the US? (No. 188). http://www.ncpathinktank.org/pdfs/st188.pdf
  • Scully, G. W. (1995). The “growth tax” in the United States. Public Choice, 85(1–2), 71–80. https://doi.org/10.1007/BF01047902
  • Şen, H., & Kaya, A. (2019). Alternatif göstergeler bazında Türkiye’de optimal kamu kesimi büyüklüğünün tahmini. Bankacılar, 30(109), 49–81. http://search/yayin/detay/354676
  • Turan, T. (2014). Optimal size of government in Turkey. International Journal of Economics and Financial Issues, 4(2), 286–294.
  • Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. In Booksgooglecom (1st ed., Issue 2).
  • Yamak, R., & Erdem, H. F. (2018). Türkiye ekonomisinde Armey eğrisi geçerli midir? Uluslararası İktisadi ve İdari İncelemeler Dergisi, Prof. Dr. Harun TERZİ Özel Sayısı, 335–346. https://doi.org/10.18092/ulikidince.442807
  • Yüksel, C. (2020). The size of the public sector and the armey curve: The case of Turkey. In Critical Debates in Public Finance (pp. 137–154). Peter Lang AG.
There are 40 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Devran Şanlı 0000-0003-4106-3799

Early Pub Date August 3, 2022
Publication Date December 31, 2022
Submission Date November 17, 2022
Acceptance Date December 25, 2022
Published in Issue Year 2022 Volume: 7 Issue: 2

Cite

APA Şanlı, D. (2022). Testing the Armey Curve Hypothesis in Turkey: Evidence from the Provincial Data. Bulletin of Economic Theory and Analysis, 7(2), 425-443. https://doi.org/10.25229/beta.1206552