SUSTAINABILITY OF FISCAL POLICY: ESTIMATING A FISCAL REACTION FUNCTION FOR TURKEY

Abstract

In this study a Fiscal policy analysis is used for Turkey between the periods 2006:12016:2 to assess the sustainability of fiscal policy. A fiscal reaction function is estimated to analyze the effects of public debt and fluctuations in GDP on the primary balance. The fiscal reaction function is obtained from the intertemporal government budget constraint in order to depict the behaviour of government towards the public debt. The results suggest that the primary budget balance reacts significantly to the previous increase in GDP gap

Keywords

• Fiscal Policy,Debt Sustainability,Fiscal Reaction Function

SUSTAINABILITY OF FISCAL POLICY: ESTIMATING A FISCAL REACTION FUNCTION FOR TURKEY

Öz

In this study a Fiscal policy analysis is used for Turkey between the periods 2006:1-2016:2 to assess the sustainability of fiscal policy. A fiscal reaction function is estimated to analyze the effects of public debt and fluctuations in GDP on the primary balance. The fiscal reaction function is obtained from the intertemporal government budget constraint in order to depict the behaviour of government towards the public debt. The results suggest that the primary budget balance reacts significantly to the previous increase in GDP gap.

Anahtar Kelimeler

• Maliye Politikası,Sürdürülebilir Borç,Mali Reaksiyon Fonksiyonu

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