BibTex RIS Cite

The Twin Deficits Phenomenon In Turkey: An Empirical Investigation

Year 2013, Volume: 2 Issue: 3, 36 - 42, 01.09.2013

Pelin Varol Iyidogan

Abstract

The aim of this study is to explore the relationship between budget deficit and the current account deficit for Turkey over the period 19872005. Considering the structural breaks in the series, the stationarity analysis is employed by means of Zivot- Andrews unit root test. In the succeeding step of the methodology, by utilizing Toda Yamamato test, the causality relationship between the budget deficit and the current account deficit is examined. The empirical results indicate that current account deficit is a causing variable for the budget deficit in Turkish economy.

Keywords

Budget deficit current account deficit structural break causality.

References

  • Afonso, A. and Rault, C. (2009), Bootstrap Panel Granger-Causality Between Government Budget and External Deficits for the EU, CESifo Working Paper, 2581.
  • Arize, A.C. and Malindretos, J. (2008), Dynamic Linkages and Granger Causality Between Trade and Budget Deficits: Evidence from Africa, African Journal of Accounting, Economics, Finance and Banking Research, 2(2), pp. 1-19.
  • Bagnai, A. (2010), Twin Deficits in CEEC Economies: Evidence From Panel Unit Root Tests, Economics Bulletin, 30(2), pp. 1-9.
  • Baharumshah, A.Z. and Lau, E. (2005), Budget and Current Account Deficits in SEACEN Countries: Evidence Based on the Panel Approach, Intenational Finance, EconWPA 0504002, pp. 1Barışık, S. and Kesikoğlu, F. (2010), Makro Ekonomik Değişken Olarak Bütçe Açığı-Cari Açık İlişkisi: Gelişmekte Olan Piyasalar Örneği, İktisat İşletme ve Finans, 25(294), pp. 109-127.
  • Beetsma, R., Giuliodori, M. and Klaassen, F. (2008), The Effects of Public Spending Shocks on Trade Balances and Budget Deficits in the European Union, Journal of the European Economic Association,6(2-3), pp. 414-423.
  • Bluedorn, J., and Leigh, D. (2011), Revisiting the Twin Deficits Hypothesis: The Effect of Fiscal Consolidation on the Current Account, IMF Economic Review 59(4), pp. 582-602.
  • Daly, V. and Siddiki, J. U. (2009), The Twin Deficits in OECD Countries: Cointegration Analysis with Regime Shifts, Applied Economic Letters, 16(11), pp. 1155-1164.
  • Datta, K. and Mukhopadhyay, C.K. (2010), Twin Deficits Phenomenon in Maldives: Spectral and Time Domain Analysis of Time Series, The IUP Journal of Applied Economics, 9(2), pp. 98-125.
  • Erdinç, Z. (2008), İkiz Açıklar Hipotezinin Türkiye’de 1950-2005 Yılları Arasında Eşbütünleşme Analizi ve Granger Nedensellik Testi ile İncelenmesi, Anadolu Üniversitesi Sosyal Bilimler Dergisi, 8(1), pp. 209-222.
  • Ganchev, G.T., Stavrova, E. and Tsenkov, V. (2012), Testing the Twin Deficit Hypothesis: The Case of Central and Eastern European Countries, International Journal of Contemporary Economics and Administrative Sciences, 2(1), pp. 1-21.
  • Katırcıoğlu, S.T., Feth, S. and Feth, M.D. (2009), Twin Deficits Phenomenon in Small İslands: An Empirical Investigation By Panel Data Analysis, Applied Economics Letters, 16(5), pp. 156915
  • Ketenci, N. and Uz, İ. (2010), Determinants of Current Account in the EU: The Relation Between Internal and External Balances in the New Members, MPRA Paper, 27466.
  • Magazzino, C. (2012), The Twin Deficits Phenomenon: Evidence From Italy, Journal of Economic Cooperation and Development, 33(3), pp. 65-80.
  • Marinheiro, C.F. (2008), Ricardian Equivalence, Twin Deficits, and the Feldstein-Horioka Puzzle in Egypt, Journal of Policy Modeling, 30, pp. 1041-1056.
  • Mukhtar, T., Zakaria, M. and Ahmed, M. (2007), An Empirical Investigation for the Twin Deficit Hypothesis in Pakistan, Journal of Economic Cooperation, 28(4), pp. 63-80.
  • Pahlavani, M. and Saleh, A. S. (2009), Budget Deficits and Current Account Deficits in Philippines: A Causal Relationship?, American Journal of Applied Sciences, 6(8), pp. 1515-1521.
  • Sever, E. and Demir, M. (2007), Türkiye’de Bütçe Açığı ile Cari Açık Arasındaki İlişkilerin VAR Analizi ile İncelenmesi, Eskişehir Osmangazi Üniversitesi İİBF Dergisi, 2(1), pp. 47-63.
  • Stournaras, C. F. (2013), Twin Deficits in Greece: Theory and Evidence from the Last Drachma Journey, Available at SSRN: http://ssrn.com/abstract=2205047 or http://dx.doi.org/10.2139/ssrn.2205047 .
  • Summers, H. L. (1988), Tax Policy and International Competitiveness. in Ed. J. Frankel, International Aspects of Fiscal Policies, Chicago: Chicago: UP, pp. 349-375.
  • Toda H. Y. and Yamamato T. (1995), Statistical Inference in Vector Autoregressions with Possibly Integrated Processes, Journal of Econometrics, 66(1-2), pp. 225-250.
  • Ümit, A. Ö. and Yıldırım, K. (2010), Ikiz Açıklar Hipotezi: Türkiye Analizi, İktisat İşletme ve Finans, 23(267), 116-132.
  • Varol İyidoğan, P. (2011), İkiz Açıklar Hipotezi: Türkiye Deneyimi, Hacettepe University Graduate School of Social Sciences Department of Economics, Unpublished Ph.D. Thesis.
  • Varol İyidoğan, P. and Erkam, S. (2013), İkiz Açıklar Hipotezi: Türkiye için Ampirik Bir İnceleme (1987-2005), Pamukkale Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 15, pp. 39-48.
  • Yay, G.G. and Taştan, H. (2007), Ikiz Açıklar Olgusu: Frekans Alanında Nedensellik Yaklaşımı, İÜ Siyasal Bilgiler Fakültesi Dergisi, 37, pp. 87-111.
  • Zivot, E. and Andrews, D. W. K. (1992), Further Evidence of the Great Crash, The Oil Price Shock and the Unit Root Hypothesis, Journal of Business and Economic Statistics, 10(3), pp. 251-270.

Year 2013, Volume: 2 Issue: 3, 36 - 42, 01.09.2013

Pelin Varol Iyidogan

Abstract

References

  • Afonso, A. and Rault, C. (2009), Bootstrap Panel Granger-Causality Between Government Budget and External Deficits for the EU, CESifo Working Paper, 2581.
  • Arize, A.C. and Malindretos, J. (2008), Dynamic Linkages and Granger Causality Between Trade and Budget Deficits: Evidence from Africa, African Journal of Accounting, Economics, Finance and Banking Research, 2(2), pp. 1-19.
  • Bagnai, A. (2010), Twin Deficits in CEEC Economies: Evidence From Panel Unit Root Tests, Economics Bulletin, 30(2), pp. 1-9.
  • Baharumshah, A.Z. and Lau, E. (2005), Budget and Current Account Deficits in SEACEN Countries: Evidence Based on the Panel Approach, Intenational Finance, EconWPA 0504002, pp. 1Barışık, S. and Kesikoğlu, F. (2010), Makro Ekonomik Değişken Olarak Bütçe Açığı-Cari Açık İlişkisi: Gelişmekte Olan Piyasalar Örneği, İktisat İşletme ve Finans, 25(294), pp. 109-127.
  • Beetsma, R., Giuliodori, M. and Klaassen, F. (2008), The Effects of Public Spending Shocks on Trade Balances and Budget Deficits in the European Union, Journal of the European Economic Association,6(2-3), pp. 414-423.
  • Bluedorn, J., and Leigh, D. (2011), Revisiting the Twin Deficits Hypothesis: The Effect of Fiscal Consolidation on the Current Account, IMF Economic Review 59(4), pp. 582-602.
  • Daly, V. and Siddiki, J. U. (2009), The Twin Deficits in OECD Countries: Cointegration Analysis with Regime Shifts, Applied Economic Letters, 16(11), pp. 1155-1164.
  • Datta, K. and Mukhopadhyay, C.K. (2010), Twin Deficits Phenomenon in Maldives: Spectral and Time Domain Analysis of Time Series, The IUP Journal of Applied Economics, 9(2), pp. 98-125.
  • Erdinç, Z. (2008), İkiz Açıklar Hipotezinin Türkiye’de 1950-2005 Yılları Arasında Eşbütünleşme Analizi ve Granger Nedensellik Testi ile İncelenmesi, Anadolu Üniversitesi Sosyal Bilimler Dergisi, 8(1), pp. 209-222.
  • Ganchev, G.T., Stavrova, E. and Tsenkov, V. (2012), Testing the Twin Deficit Hypothesis: The Case of Central and Eastern European Countries, International Journal of Contemporary Economics and Administrative Sciences, 2(1), pp. 1-21.
  • Katırcıoğlu, S.T., Feth, S. and Feth, M.D. (2009), Twin Deficits Phenomenon in Small İslands: An Empirical Investigation By Panel Data Analysis, Applied Economics Letters, 16(5), pp. 156915
  • Ketenci, N. and Uz, İ. (2010), Determinants of Current Account in the EU: The Relation Between Internal and External Balances in the New Members, MPRA Paper, 27466.
  • Magazzino, C. (2012), The Twin Deficits Phenomenon: Evidence From Italy, Journal of Economic Cooperation and Development, 33(3), pp. 65-80.
  • Marinheiro, C.F. (2008), Ricardian Equivalence, Twin Deficits, and the Feldstein-Horioka Puzzle in Egypt, Journal of Policy Modeling, 30, pp. 1041-1056.
  • Mukhtar, T., Zakaria, M. and Ahmed, M. (2007), An Empirical Investigation for the Twin Deficit Hypothesis in Pakistan, Journal of Economic Cooperation, 28(4), pp. 63-80.
  • Pahlavani, M. and Saleh, A. S. (2009), Budget Deficits and Current Account Deficits in Philippines: A Causal Relationship?, American Journal of Applied Sciences, 6(8), pp. 1515-1521.
  • Sever, E. and Demir, M. (2007), Türkiye’de Bütçe Açığı ile Cari Açık Arasındaki İlişkilerin VAR Analizi ile İncelenmesi, Eskişehir Osmangazi Üniversitesi İİBF Dergisi, 2(1), pp. 47-63.
  • Stournaras, C. F. (2013), Twin Deficits in Greece: Theory and Evidence from the Last Drachma Journey, Available at SSRN: http://ssrn.com/abstract=2205047 or http://dx.doi.org/10.2139/ssrn.2205047 .
  • Summers, H. L. (1988), Tax Policy and International Competitiveness. in Ed. J. Frankel, International Aspects of Fiscal Policies, Chicago: Chicago: UP, pp. 349-375.
  • Toda H. Y. and Yamamato T. (1995), Statistical Inference in Vector Autoregressions with Possibly Integrated Processes, Journal of Econometrics, 66(1-2), pp. 225-250.
  • Ümit, A. Ö. and Yıldırım, K. (2010), Ikiz Açıklar Hipotezi: Türkiye Analizi, İktisat İşletme ve Finans, 23(267), 116-132.
  • Varol İyidoğan, P. (2011), İkiz Açıklar Hipotezi: Türkiye Deneyimi, Hacettepe University Graduate School of Social Sciences Department of Economics, Unpublished Ph.D. Thesis.
  • Varol İyidoğan, P. and Erkam, S. (2013), İkiz Açıklar Hipotezi: Türkiye için Ampirik Bir İnceleme (1987-2005), Pamukkale Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 15, pp. 39-48.
  • Yay, G.G. and Taştan, H. (2007), Ikiz Açıklar Olgusu: Frekans Alanında Nedensellik Yaklaşımı, İÜ Siyasal Bilgiler Fakültesi Dergisi, 37, pp. 87-111.
  • Zivot, E. and Andrews, D. W. K. (1992), Further Evidence of the Great Crash, The Oil Price Shock and the Unit Root Hypothesis, Journal of Business and Economic Statistics, 10(3), pp. 251-270.
There are 25 citations in total.

Details

Journal Section Articles
Authors

Pelin Varol Iyidogan This is me

Publication Date September 1, 2013
Published in Issue Year 2013 Volume: 2 Issue: 3

Cite

APA Iyidogan, P. V. (2013). The Twin Deficits Phenomenon In Turkey: An Empirical Investigation. Journal of Business Economics and Finance, 2(3), 36-42.

Journal of Business, Economics and Finance (JBEF) is a scientific, academic, double blind peer-reviewed, quarterly and open-access journal. The publication language is English. The journal publishes four issues a year. The issuing months are March, June, September and December. The journal aims to provide a research source for all practitioners, policy makers and researchers working in the areas of business, economics and finance. The Editor of JBEF invites all manuscripts that that cover theoretical and/or applied researches on topics related to the interest areas of the Journal. JBEF charges no submission or publication fee.



Ethics Policy - JBEF applies the standards of Committee on Publication Ethics (COPE). JBEF is committed to the academic community ensuring ethics and quality of manuscripts in publications. Plagiarism is strictly forbidden and the manuscripts found to be plagiarized will not be accepted or if published will be removed from the publication. Authors must certify that their manuscripts are their original work. Plagiarism, duplicate, data fabrication and redundant publications are forbidden. The manuscripts are subject to plagiarism check by iThenticate or similar. All manuscript submissions must provide a similarity report (up to 15% excluding quotes, bibliography, abstract, method).


Open Access - All research articles published in PressAcademia Journals are fully open access; immediately freely available to read, download and share. Articles are published under the terms of a Creative Commons license which permits use, distribution and reproduction in any medium, provided the original work is properly cited. Open access is a property of individual works, not necessarily journals or publishers. Community standards, rather than copyright law, will continue to provide the mechanism for enforcement of proper attribution and responsible use of the published work, as they do now.