IS THE SIZE OF PUBLIC SECTOR DETERMINING IN ACHIEVING MACROECONOMİC STABILITY? THE CASE OF TURKEY
Abstract
It is argued that the economy model, in which the public sector is predominant, provides more advantages than the economy model in which the market economy is effective in the process of ensuring macroeconomic stability, and this is a requirement of the welfare state understanding. From this basic view, the relationship between the economic size of the public sector and macroeconomic stability was examined in the study, in which Turkeyˈs data for the period 1980-2019 was used. According to the causality test results of Toda and Yamamoto (1995), it was concluded that there is a causal relationship from public expenditures to economic growth and inflation, but there is no causality relationship to unemployment. These results provide important evidence that changes in the size of the public sector are the cause of changes in economic growth and inflation.
Keywords
The Size of Public Sector, Public Expenditure, Macroeconomic Stability, Causality Test.
Project Number
Yok
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