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POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001

Year 2014, Volume: 36 Issue: 2, 185 - 213, 16.03.2015
https://doi.org/10.14780/iibd.84728

Abstract

This study is about political business cycles (PBC) and investigates the Turkish case in the 1977-2001 period. The PBC literature has been developed in the last four-five decades and links economics and politics in several ways. In the first part of the study, developments in the literature are mentioned and the link between New Classical Economics and New Political Economics is introduced. In the second part, Turkish case is analyzed in details to determine whether there have been PBC during the above mentioned period. The results show that there have been political cycles in some macroeconomic variables which are currency issued, broad money (M1), public sector credits and agricultural credits extended by Central Bank of the Republic of Turkey (CBRT), and tax revenues. CBRT has not allowed PBC especially on the targeted variables (CBRT balance sheet size, net domestic assets and monetary base), after 1989. Due to the high legal ceilings of CBRT credits to the public sector, CBRT was not able to limit those credits, especially before 1991 general elections. There had been similar PBC on agricultural credits which had been extended in the 1977-1991 period by CBRT. In addition to the regression analysis, comparative tables and figures for personnel expenditures of State Economic Enterprises (SEEs), agricultural credits which had been extended by Agricultural Bank of the Republic of Turkey (ABRT) in the 1964-1998 period and agricultural prices which had been declared by governments in the 1986-1999 period are provided in the paper. The study provides some evidence to PBC literature and determines which policy instruments could have been used to produce PBC in the Turkish economy. And it is also important to learn which policies can be manipulated in order to prevent the PBC in the future

References

  • ALESINA, A. (1987), “Macroeconomic Policy in a Two-Party System as a Repeated Game”, Quarterly Journal of Economics, 102, 650-678.
  • ALESINA, A., Cohen, G.D. and Roubini, N. (1992), “Macroecomic Policy and Elec- tions in OECD Democracies. Centre for Economic Policy Research, Discus- sion Paper No. 608.
  • ALESINA, A., Cohen, G.D. and Roubini, N. (1997), Political Cycles and the Macro- economy, Cambridge, Mass. (USA): The MIT Press.
  • BERGER, H. and Woitek, U. (1997), “Searching for Political Business Cycles in Ger- many”, Public Choice, 91, 2, 179-97.
  • BERGER, H. and Woitek, U. (1999), Further Observations on the Political Business Cycle in German Monetary Aggregates, CES, University of Munich and Uni- versity of Glasgow.
  • BERGER, H. and Woitek, U., (2001), “The German political business cycle: money demand rather than monetary policy” European Journal of Political Eco- nomy 17, 3, 609-631.
  • BLOCK, S. A. (2002), Political Business Cycles, Democratization, and Economic Reform: The Case of Africa, Journal of Development Economics, 67, 1, 205- 228.
  • BOX G., Jenkins, G. (1976), Time Series Analysis, Forecasting, and Control. San Francisco, Calif. Holden Day.
  • CAMERON, L. and Crosby, M. (2000), “It’s the Economy Stupid: Macroeconomics and Federal Elections in Australia”, The Economic Record, Vol. 76, No. 235, (354-364).
  • CAMPBELL, J.Y. and Perron, P. (1991), “Pittfalls and Opportunities: What Macroe- conomists Should Know About Unit Roots”, National Bureau of Economic Research, Technical Working Paper No: 100.
  • DOWNS, A. (1957), An Economic Theory of Democracy, New York: Harper & Row.
  • ENDERS, W. (1995), Applied Econometric Time Series, USA and Canada: John Wi- ley & Sons, Inc.
  • EREN, E. and Bildirici, M. (1999), “Siyasal Konjonktür Dalgaları ve Türkiye’de Seç- men Davranışı”. İktisat, İşletme ve Finans Dergisi, Ekim, 27-37.
  • ERGUN, M. (2000), Electoral Political Business Cycles in Turkey, Thesis (Master’s) Bilkent University.
  • ERSEL, H. and Öztürk, E. (1992), Para Politikası Uygulamaları ve Para Miktarı, TCMB Araştırma Genel Müdürlüğü, Tartışma Tebliği, 9207.
  • HALL, A. (1994) Testing for a unit root in time series with pretest data-based model selection, Journal of Business and Economic Statistics, 12, 461-70.
  • HALLERBERG, M. and Souza, L. V. (2000), “The Political Business Cycles of EU Accession Countries”, Tinbergen Institute Discussion Paper, TI 2000-085/2.
  • HIBBS, D. (1977), “Political Parties and Macroeconomic Policy”, American Politi- cal Science Review, 71, 1466-1487.
  • KYDLAND, F. and Prescott, E. (1977), “Rules Rather than Discretion: The Inconsis- tency of Optimal Plans, Journal of Political Economy, 85, 473-90.
  • KUZU, Y. (2001), Türkiye Ekonomisinde Politik Devresel Hareketler, Yüksek Lisans Tezi, Ankara Üniversitesi Sosyal Bilimler Enstitüsü.
  • LEERTOUWER, E. and Maier, P. (2000) International and Domestic Constraints on Political Business Cycles in OECD Economies: A Comment, University of Groeningen.
  • LEERTOUWER, E. and Maier, P. (2001), “Who creates political business cycles: should central banks be blamed?”, European Journal of Political Economy, 17, 3, 445-463.
  • LOCKWOOD, B., Philippopoulos, A. and Tzavalis, E., (2001) “Fiscal policy and po- litics: theory and evidence from Greece 1960–1997”, Economic Modelling, 18, 2, 253-268.
  • MACKINNON, J. G. (1991), Critical Values for Cointegration Tests. In: R. F. Engle and C. W. J. Granger (Eds.) Long-run Economic Relationships: Readings in Cointegration, Oxford University Press, Oxford. pp.267–276.
  • MUTH, J.F. (1961), “Rational Expectations and the Theory of Price Movements”, Econometrica, 29, 3, 315-335.
  • NELSON, C.R. and Plosser, C.I. (1982), “Trends and Random Walks in Macroeco- nomic Time Series: Some Evidence and Implications, Journal of Monetary Economics, 10, 139-162.
  • NORDHAUS, W. (1975), “The Political Business Cycle”, The Review of Economic Studies, 42, 169-191.
  • OLTERS, J.P. (2001), “Modeling Politics with Economic Tools: A Critical Survey of the Literature” , IMF Working Papers, WP/01/10.
  • ÖZATAY, F. (1999), “Populist Policies and the Role of Economic Institutions in the Performance of Turkish Economy”, Yapı Kredi Economic Review, 10, 1.
  • ÖZATAY, F. (2000), Public Price Controls, Deficit Financing, and Electoral Cycles, A Paper Presented at METU Conference in Economics in Sept. 13-16.
  • ÖZTÜRK, E. (1992), Türkiye’de Son Dönemde Para Politikası Tartışmaları, TCMB Araştırma Genel Müdürlüğü, Tartışma Tebliği, 9206.
  • PALDMAN, M. (1997), “Political Business Cycles”, in Mueller 1997 (ed.) Perspec- tives of Public Choice.
  • PERRON, P. (1989), “The Great Crash, the Oil Price Shock, and the Unit Root Hypo- thesis, Econometrica, 57, 1361-1401.
  • PERSSON, T. and Tabellini, G. (1990), Macroeconomic Policy, Credibility and Poli- tics, New York: Harwood Academic Publishers.
  • PHILLIPS, A. W. (1958), “The Relation between Unemployment and the Rate of Change of Money Wages in the United Kingdom, 1861-1957”, Economica, 25, 100, 283-299.
  • PITRUZELLO, S. (1999), “Political Business Cycles and Independent Central Banks. German Governments and the Bundesbank (1960-1989), EUI Working Paper RSC No. 99/7.
  • ROGOFF, K. and Sibert, A. (1988), “Elections and Macroeconomic Policy Cycles”, Review of Economic Studies, 55, 1-16
  • SCHUMPETER, J. (1945), Capitalism and Democracy, New York: Harper, 1945.
  • TELATAR, F. (2001), “Politik Devresel Dalgalanmalar Teorisi Işı ğında Demokra- si-Siyaset-Ekonomi İlişkisi”, İktisat, İşletme ve Finans, 16, 187, 57-66.
  • TREISMAN, D. and Gimpelson, V. (1999), “Political Business Cycles and Russian Elections, or the Manipulations of ‘Chudar’”, CIRJE-F-39.
  • TUTAR, İ. and Tansel, A. (2000), Political Business Cycles, Institutional Structure and Budget Deficits in Turkey, A Paper Presented at METU Conference in Economics in September 13-16, 2000.
  • WEBER, C. E. (2001), “Alternative Lag Length Selection Criteria and the Split- Trend Stationarity Hypothesis”, Applied Economics, 33, 237-247.
  • YAMAK, N. and Yamak, R. (1999), “Türkiye’de Genel Milletvekili Seçimleri ve Eko- nomi”, İktisat, İşletme ve Finans Dergisi, Şubat, 47-57.
  • ZIVOT, E. and Andrews, D. (1992), “Further Evidence on the Great Crash, the Oil Pri- ce Shock and the Unit Root Hypothesis, Journal of Business and Economics Statistics, 10, 251-270.

TÜRKİYE EKONOMİSİNDE POLİTİK DEVRESEL HAREKETLER: 1977-2001

Year 2014, Volume: 36 Issue: 2, 185 - 213, 16.03.2015
https://doi.org/10.14780/iibd.84728

Abstract

Bu çalışma, politik devresel hareketlerle (PDH) ilgili olup, 1977-2001 döneminde Türkiye’de PDH’yi araştırmaktadır. PDH literatürü son 40-50 yılda gelişmiş olup, iktisadı ve politikayı çeşitli yönlerden birbirine bağlamaktadır. Çalışmanın ilk bölümünde literatürdeki gelişmelere değinilmiş ve Yeni Klasik İktisat ile Yeni Politik İktisat arasındaki bağ tanıtılmıştır. İkinci bölümde, söz konusu dönem için PDH olup olmadığına ilişkin detaylı bir Türkiye analizi yer almaktadır. Sonuçlara göre emisyon, dar anlamda para arzı (M1), Merkez Bankası’nca verilen kamu sektörü kredileri ve tarımsal krediler, vergi gelirleri gibi bazı makro değişkenlerde PDH bulunmaktadır. Bununla birlikte, Merkez Bankası 1989’dan itibaren özellikle hedef değişkenlerde (TCMB bilanço büyüklüğü, net yurt içi varlıklar, parasal taban)PDH’ye izin vermemiştir. Merkez bankasının kamu sektörüne yönelik kredilerindeki yüksek yasal tavanlar dolayısıyla özellikle 1991 genel seçimlerine kadar Merkez Bankası, bu kredilere sınırlandırma getirememiştir. Benzer PDH 1977-1991 döneminde açılan tarımsal kredilerde de yaşanmıştır. Çalışmada regresyon analizine ek olarak, Kamu İktisadi Kuruluşlarının personel harcamalarının, Türkiye Cumhuriyeti Ziraat Bankası’nca 1964-1998 döneminde açılan tarımsal krediler, 1986-1999 döneminde hükümetlerce açıklanan tarımsal fiyatlara ilişkin karşılaştırmalı tablo ve figürler de yer almaktadır. Çalışma PDH literatürüne bir miktar katkı sağlamakta ve Türkiye ekonomisinde PDH’ye neden olabilecek politika araçlarını belirlemektedir. Ayrıca, seçim öncesinde hangi politikaların manipüle edilebileceğini öğrenmek, gelecekte PDH yaşanmasını önlemek için önemli görünmektedir. 

References

  • ALESINA, A. (1987), “Macroeconomic Policy in a Two-Party System as a Repeated Game”, Quarterly Journal of Economics, 102, 650-678.
  • ALESINA, A., Cohen, G.D. and Roubini, N. (1992), “Macroecomic Policy and Elec- tions in OECD Democracies. Centre for Economic Policy Research, Discus- sion Paper No. 608.
  • ALESINA, A., Cohen, G.D. and Roubini, N. (1997), Political Cycles and the Macro- economy, Cambridge, Mass. (USA): The MIT Press.
  • BERGER, H. and Woitek, U. (1997), “Searching for Political Business Cycles in Ger- many”, Public Choice, 91, 2, 179-97.
  • BERGER, H. and Woitek, U. (1999), Further Observations on the Political Business Cycle in German Monetary Aggregates, CES, University of Munich and Uni- versity of Glasgow.
  • BERGER, H. and Woitek, U., (2001), “The German political business cycle: money demand rather than monetary policy” European Journal of Political Eco- nomy 17, 3, 609-631.
  • BLOCK, S. A. (2002), Political Business Cycles, Democratization, and Economic Reform: The Case of Africa, Journal of Development Economics, 67, 1, 205- 228.
  • BOX G., Jenkins, G. (1976), Time Series Analysis, Forecasting, and Control. San Francisco, Calif. Holden Day.
  • CAMERON, L. and Crosby, M. (2000), “It’s the Economy Stupid: Macroeconomics and Federal Elections in Australia”, The Economic Record, Vol. 76, No. 235, (354-364).
  • CAMPBELL, J.Y. and Perron, P. (1991), “Pittfalls and Opportunities: What Macroe- conomists Should Know About Unit Roots”, National Bureau of Economic Research, Technical Working Paper No: 100.
  • DOWNS, A. (1957), An Economic Theory of Democracy, New York: Harper & Row.
  • ENDERS, W. (1995), Applied Econometric Time Series, USA and Canada: John Wi- ley & Sons, Inc.
  • EREN, E. and Bildirici, M. (1999), “Siyasal Konjonktür Dalgaları ve Türkiye’de Seç- men Davranışı”. İktisat, İşletme ve Finans Dergisi, Ekim, 27-37.
  • ERGUN, M. (2000), Electoral Political Business Cycles in Turkey, Thesis (Master’s) Bilkent University.
  • ERSEL, H. and Öztürk, E. (1992), Para Politikası Uygulamaları ve Para Miktarı, TCMB Araştırma Genel Müdürlüğü, Tartışma Tebliği, 9207.
  • HALL, A. (1994) Testing for a unit root in time series with pretest data-based model selection, Journal of Business and Economic Statistics, 12, 461-70.
  • HALLERBERG, M. and Souza, L. V. (2000), “The Political Business Cycles of EU Accession Countries”, Tinbergen Institute Discussion Paper, TI 2000-085/2.
  • HIBBS, D. (1977), “Political Parties and Macroeconomic Policy”, American Politi- cal Science Review, 71, 1466-1487.
  • KYDLAND, F. and Prescott, E. (1977), “Rules Rather than Discretion: The Inconsis- tency of Optimal Plans, Journal of Political Economy, 85, 473-90.
  • KUZU, Y. (2001), Türkiye Ekonomisinde Politik Devresel Hareketler, Yüksek Lisans Tezi, Ankara Üniversitesi Sosyal Bilimler Enstitüsü.
  • LEERTOUWER, E. and Maier, P. (2000) International and Domestic Constraints on Political Business Cycles in OECD Economies: A Comment, University of Groeningen.
  • LEERTOUWER, E. and Maier, P. (2001), “Who creates political business cycles: should central banks be blamed?”, European Journal of Political Economy, 17, 3, 445-463.
  • LOCKWOOD, B., Philippopoulos, A. and Tzavalis, E., (2001) “Fiscal policy and po- litics: theory and evidence from Greece 1960–1997”, Economic Modelling, 18, 2, 253-268.
  • MACKINNON, J. G. (1991), Critical Values for Cointegration Tests. In: R. F. Engle and C. W. J. Granger (Eds.) Long-run Economic Relationships: Readings in Cointegration, Oxford University Press, Oxford. pp.267–276.
  • MUTH, J.F. (1961), “Rational Expectations and the Theory of Price Movements”, Econometrica, 29, 3, 315-335.
  • NELSON, C.R. and Plosser, C.I. (1982), “Trends and Random Walks in Macroeco- nomic Time Series: Some Evidence and Implications, Journal of Monetary Economics, 10, 139-162.
  • NORDHAUS, W. (1975), “The Political Business Cycle”, The Review of Economic Studies, 42, 169-191.
  • OLTERS, J.P. (2001), “Modeling Politics with Economic Tools: A Critical Survey of the Literature” , IMF Working Papers, WP/01/10.
  • ÖZATAY, F. (1999), “Populist Policies and the Role of Economic Institutions in the Performance of Turkish Economy”, Yapı Kredi Economic Review, 10, 1.
  • ÖZATAY, F. (2000), Public Price Controls, Deficit Financing, and Electoral Cycles, A Paper Presented at METU Conference in Economics in Sept. 13-16.
  • ÖZTÜRK, E. (1992), Türkiye’de Son Dönemde Para Politikası Tartışmaları, TCMB Araştırma Genel Müdürlüğü, Tartışma Tebliği, 9206.
  • PALDMAN, M. (1997), “Political Business Cycles”, in Mueller 1997 (ed.) Perspec- tives of Public Choice.
  • PERRON, P. (1989), “The Great Crash, the Oil Price Shock, and the Unit Root Hypo- thesis, Econometrica, 57, 1361-1401.
  • PERSSON, T. and Tabellini, G. (1990), Macroeconomic Policy, Credibility and Poli- tics, New York: Harwood Academic Publishers.
  • PHILLIPS, A. W. (1958), “The Relation between Unemployment and the Rate of Change of Money Wages in the United Kingdom, 1861-1957”, Economica, 25, 100, 283-299.
  • PITRUZELLO, S. (1999), “Political Business Cycles and Independent Central Banks. German Governments and the Bundesbank (1960-1989), EUI Working Paper RSC No. 99/7.
  • ROGOFF, K. and Sibert, A. (1988), “Elections and Macroeconomic Policy Cycles”, Review of Economic Studies, 55, 1-16
  • SCHUMPETER, J. (1945), Capitalism and Democracy, New York: Harper, 1945.
  • TELATAR, F. (2001), “Politik Devresel Dalgalanmalar Teorisi Işı ğında Demokra- si-Siyaset-Ekonomi İlişkisi”, İktisat, İşletme ve Finans, 16, 187, 57-66.
  • TREISMAN, D. and Gimpelson, V. (1999), “Political Business Cycles and Russian Elections, or the Manipulations of ‘Chudar’”, CIRJE-F-39.
  • TUTAR, İ. and Tansel, A. (2000), Political Business Cycles, Institutional Structure and Budget Deficits in Turkey, A Paper Presented at METU Conference in Economics in September 13-16, 2000.
  • WEBER, C. E. (2001), “Alternative Lag Length Selection Criteria and the Split- Trend Stationarity Hypothesis”, Applied Economics, 33, 237-247.
  • YAMAK, N. and Yamak, R. (1999), “Türkiye’de Genel Milletvekili Seçimleri ve Eko- nomi”, İktisat, İşletme ve Finans Dergisi, Şubat, 47-57.
  • ZIVOT, E. and Andrews, D. (1992), “Further Evidence on the Great Crash, the Oil Pri- ce Shock and the Unit Root Hypothesis, Journal of Business and Economics Statistics, 10, 251-270.
There are 44 citations in total.

Details

Primary Language English
Journal Section Makaleler
Authors

Yasemin Gezgin

Publication Date March 16, 2015
Submission Date March 16, 2015
Published in Issue Year 2014 Volume: 36 Issue: 2

Cite

APA Gezgin, Y. (2015). POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001. Marmara Üniversitesi İktisadi Ve İdari Bilimler Dergisi, 36(2), 185-213. https://doi.org/10.14780/iibd.84728
AMA Gezgin Y. POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001. Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi. March 2015;36(2):185-213. doi:10.14780/iibd.84728
Chicago Gezgin, Yasemin. “POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001”. Marmara Üniversitesi İktisadi Ve İdari Bilimler Dergisi 36, no. 2 (March 2015): 185-213. https://doi.org/10.14780/iibd.84728.
EndNote Gezgin Y (March 1, 2015) POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001. Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi 36 2 185–213.
IEEE Y. Gezgin, “POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001”, Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi, vol. 36, no. 2, pp. 185–213, 2015, doi: 10.14780/iibd.84728.
ISNAD Gezgin, Yasemin. “POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001”. Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi 36/2 (March 2015), 185-213. https://doi.org/10.14780/iibd.84728.
JAMA Gezgin Y. POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001. Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi. 2015;36:185–213.
MLA Gezgin, Yasemin. “POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001”. Marmara Üniversitesi İktisadi Ve İdari Bilimler Dergisi, vol. 36, no. 2, 2015, pp. 185-13, doi:10.14780/iibd.84728.
Vancouver Gezgin Y. POLITICAL BUSINESS CYCLES IN THE TURKISH ECONOMY: 1977-2001. Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi. 2015;36(2):185-213.

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