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Effect of Government Expenditure on GDP in the Turkish Economy

Year 2017, Volume: 9 Issue: 2, 69 - 76, 04.10.2017
https://doi.org/10.33818/ier.336791

Abstract


The objective of this article is to investigate the
effect of government expenditure on GDP in Turkey from 2000Q1-2015Q4 by the
superexogeneity test. As a consequence of satisfying both
conditions of weak exogeneity and structural
invariance, government expenditure is
 
superexogenous to GDP which implies that the policy regime shift for the
period of the Global Financial Crisis in Turkey did not cause structural
variance in government expenditure. Indeed, the Lucas Critique which indicates
that policy regime shifts cause structural breaks, appears to be refuted.

References

  • Ball, L., & Mazumder, S. (2015). A Phillips Curve with Anchored Expectations and Short-Term Unemployment. IMF Working Paper. https://doi.org/10.3386/w20715
  • Berlemann, M., & Wesselhöft, J.-E. (2014). Estimating aggregate capital stocks using the perpetual inventory method. Review of Economics, 65(1), 1–34.
  • Castelnuovo, E. (2008). Regime shifts and the stability of backward-looking Phillips curves in open economies. Journal of International Money and Finance, 27(1), 40–53. https://doi.org/10.1016/j.jimonfin.2007.09.004
  • Davidson, J. E., Hendry, D., Srba, F., & Yeo, S. (1978). Econometric Modelling of the Aggregate Time-Series Relationship Between Consumers’ Expenditure and Income in the United Kingtom. The Economic Journal, 88, 661–692.
  • Engle, R. F., & Hendry, D. F. (1993). Testing superexogeneity and invariance in regression models. Journal of Econometrics, 56(1–2), 119–139. https://doi.org/10.1016/0304-4076(93)90103-C
  • Engle, R. F., Hendry, D. F., & Richard, J.-F. (1983). Exogeneity. Journal of Econometric Society, 277–304.
  • Habibullah, M. S., Azali, M., & Baharumshah, A. Z. (2001). Money, income and the Lucas critique: the case for Malaysia. Analisis, 8(1&2), 69–85. Retrieved from http://repo.uum.edu.my/431/
  • Hurn, A. S., & Muscatelli, V. A. (1992). Testing Superexogeneity: the Demand for Broad Money in the Uk. Oxford Bulletin of Economics and Statistics, 54(4), 543–556. https://doi.org/10.1111/j.1468-0084.1992.mp54004004.x
  • Karunaratne, N. D. (1996). Growth and trade dynamics under regime shifts in Australia. Journal of Economic Studies, 23(2), 55–69.
  • Lindé, J. (2001). Testing for the Lucas critique: A quantitative investigation. American Economic Review, 91(4), 986–1005.
  • Lucas, R. E. (1976). Econometric policy evaluation: A Critique. Carnegie-Rochester Conference Series on Public Policy, 1(1), 19–46. https://doi.org/10.1080/000368497327344
  • Montanaro, P. (2003). Lo stock di capitale pubblico: una stima per regione e per tipologia di bene. Rivista Economica Del Mezzogiorno, 17(3), 423–462.
  • Rudebusch, G. (2005). Assessing the Lucas critique in monetary policy models. Journal of Money, Credit and Banking, 37(2), 245–72. https://doi.org/10.1353/mcb.2005.0024
  • Valadkhani, A. (1998). Effect of government capital expenditure on GDP in the Iranian economy using superexogeneity testing. Applied Economics Letters, 5(6), 361–364. https://doi.org/10.1080/135048598354726
Year 2017, Volume: 9 Issue: 2, 69 - 76, 04.10.2017
https://doi.org/10.33818/ier.336791

Abstract

References

  • Ball, L., & Mazumder, S. (2015). A Phillips Curve with Anchored Expectations and Short-Term Unemployment. IMF Working Paper. https://doi.org/10.3386/w20715
  • Berlemann, M., & Wesselhöft, J.-E. (2014). Estimating aggregate capital stocks using the perpetual inventory method. Review of Economics, 65(1), 1–34.
  • Castelnuovo, E. (2008). Regime shifts and the stability of backward-looking Phillips curves in open economies. Journal of International Money and Finance, 27(1), 40–53. https://doi.org/10.1016/j.jimonfin.2007.09.004
  • Davidson, J. E., Hendry, D., Srba, F., & Yeo, S. (1978). Econometric Modelling of the Aggregate Time-Series Relationship Between Consumers’ Expenditure and Income in the United Kingtom. The Economic Journal, 88, 661–692.
  • Engle, R. F., & Hendry, D. F. (1993). Testing superexogeneity and invariance in regression models. Journal of Econometrics, 56(1–2), 119–139. https://doi.org/10.1016/0304-4076(93)90103-C
  • Engle, R. F., Hendry, D. F., & Richard, J.-F. (1983). Exogeneity. Journal of Econometric Society, 277–304.
  • Habibullah, M. S., Azali, M., & Baharumshah, A. Z. (2001). Money, income and the Lucas critique: the case for Malaysia. Analisis, 8(1&2), 69–85. Retrieved from http://repo.uum.edu.my/431/
  • Hurn, A. S., & Muscatelli, V. A. (1992). Testing Superexogeneity: the Demand for Broad Money in the Uk. Oxford Bulletin of Economics and Statistics, 54(4), 543–556. https://doi.org/10.1111/j.1468-0084.1992.mp54004004.x
  • Karunaratne, N. D. (1996). Growth and trade dynamics under regime shifts in Australia. Journal of Economic Studies, 23(2), 55–69.
  • Lindé, J. (2001). Testing for the Lucas critique: A quantitative investigation. American Economic Review, 91(4), 986–1005.
  • Lucas, R. E. (1976). Econometric policy evaluation: A Critique. Carnegie-Rochester Conference Series on Public Policy, 1(1), 19–46. https://doi.org/10.1080/000368497327344
  • Montanaro, P. (2003). Lo stock di capitale pubblico: una stima per regione e per tipologia di bene. Rivista Economica Del Mezzogiorno, 17(3), 423–462.
  • Rudebusch, G. (2005). Assessing the Lucas critique in monetary policy models. Journal of Money, Credit and Banking, 37(2), 245–72. https://doi.org/10.1353/mcb.2005.0024
  • Valadkhani, A. (1998). Effect of government capital expenditure on GDP in the Iranian economy using superexogeneity testing. Applied Economics Letters, 5(6), 361–364. https://doi.org/10.1080/135048598354726
There are 14 citations in total.

Details

Journal Section Articles
Authors

Esra Şimşek

Mehmet Orhan This is me

Fatih Macit This is me

Publication Date October 4, 2017
Submission Date September 5, 2017
Published in Issue Year 2017 Volume: 9 Issue: 2

Cite

APA Şimşek, E., Orhan, M., & Macit, F. (2017). Effect of Government Expenditure on GDP in the Turkish Economy. International Econometric Review, 9(2), 69-76. https://doi.org/10.33818/ier.336791
AMA Şimşek E, Orhan M, Macit F. Effect of Government Expenditure on GDP in the Turkish Economy. IER. October 2017;9(2):69-76. doi:10.33818/ier.336791
Chicago Şimşek, Esra, Mehmet Orhan, and Fatih Macit. “Effect of Government Expenditure on GDP in the Turkish Economy”. International Econometric Review 9, no. 2 (October 2017): 69-76. https://doi.org/10.33818/ier.336791.
EndNote Şimşek E, Orhan M, Macit F (October 1, 2017) Effect of Government Expenditure on GDP in the Turkish Economy. International Econometric Review 9 2 69–76.
IEEE E. Şimşek, M. Orhan, and F. Macit, “Effect of Government Expenditure on GDP in the Turkish Economy”, IER, vol. 9, no. 2, pp. 69–76, 2017, doi: 10.33818/ier.336791.
ISNAD Şimşek, Esra et al. “Effect of Government Expenditure on GDP in the Turkish Economy”. International Econometric Review 9/2 (October 2017), 69-76. https://doi.org/10.33818/ier.336791.
JAMA Şimşek E, Orhan M, Macit F. Effect of Government Expenditure on GDP in the Turkish Economy. IER. 2017;9:69–76.
MLA Şimşek, Esra et al. “Effect of Government Expenditure on GDP in the Turkish Economy”. International Econometric Review, vol. 9, no. 2, 2017, pp. 69-76, doi:10.33818/ier.336791.
Vancouver Şimşek E, Orhan M, Macit F. Effect of Government Expenditure on GDP in the Turkish Economy. IER. 2017;9(2):69-76.