In the traditional macroeconomic theory, there are many debates as to
whether fiscal policies are important in determining the price level. In this
context, according to economists who advocate the Ricardian Fiscal Policy
(RFPs), fiscal policy does not matter in determining the price level. For RFPs,
public debt is the most important determinant of the primary surplus. On the
other hand, some economists have argued that fiscal policies are important in
determining the price level. This approach is called the Fiscal Theory of the
Price Level (FTPL). According to the FTPL or non-Ricardian fiscal policy, it
has been argued that the central bank will not be able to implement effective
policies to maintain price stability over the years when fiscal policy is
lacking the current discipline. It is important to
investigate the effect of fiscal policy in determining the price level of
Turkey, which is a candidate country for the European Union. The main purpose
of this study is to analyze the validity of RFPs or FTPL in Turkey. Data covers
the 1975-2014 period. The established model was tested by ARDL bounds testing
approach from time series techniques. RFPs is valid in that period according to
the performed analysis. In
this context, it is important to maintain fiscal discipline in order to ensure
Maastricht criteria in Turkey.
Primary Language | Turkish |
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Journal Section | Articles |
Authors | |
Publication Date | June 29, 2018 |
Submission Date | November 2, 2016 |
Published in Issue | Year 2018 |
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