BUDGET DEFICIT AND INFLATION IN 11 EU COUNTRIES: NEW INSIGHTS FROM PANEL SMOOTH TRANSITION REGRESSION MODELING

Öz

The persistent increase in permanent budget deficits and inflation rates observed in developed nations since the 1970s has raised significant global economic concerns. This has prompted both academic and political communities to focus on deficit financing. Previous studies have considered the relationship between budget deficit and inflation to be linear. However, this study posits that the association between the two variables is nonlinear. This study aims to examine the threshold and asymmetric relationship between budget deficit and inflation across different political stability levels in 11 EU countries from 1997 to 2016, using the innovative Panel Smooth Transition Regression Model (PSTR). Empirical results indicate that as the budget deficit increases, the inflation rate rises, especially at a higher political risk index, validating the “Tanzi effect”. Conversely, in the low political risk index, as inflation rises, the budget deficit decreases, validating the “Patinkin effect”.

Anahtar Kelimeler

• Panel Smooth Transition Regression
• Budget Deficit
• Inflation
• Political Risk Index
• 11 EU Countries

11 AB ÜLKESİNDE BÜTÇE AÇIĞI VE ENFLASYON: YUMUŞAK GEÇİŞLİ PANEL REGRESYON MODELLEMESİNDEN YENİ BİLGİLER

Öz

1970'lerden bu yana gelişmiş ülkelerde gözlenen kalıcı bütçe açıkları ve enflasyon oranlarındaki sürekli artış, önemli küresel ekonomik endişelere yol açmıştır. Bu durum hem akademik hem de siyasi çevrelerin bütçe açığı finansmanına odaklanmasına neden olmuştur. Önceki çalışmalar bütçe açığı ve enflasyon arasındaki ilişkinin doğrusal olduğunu kabul etmiştir. Ancak bu çalışma, bütçe açığı ve enflasyon arasındaki ilişkinin doğrusal olmadığını öne sürmektedir. Bu çalışmanın amacı, yeni bir teknik olan Panel Düzgün Geçişli Regresyon Modeli (PSTR) kullanarak, 1997-2016 yılları arasında 11 AB ülkesinde farklı siyasi istikrar seviyelerindeki çeşitli rejimlerde bütçe açığı ve enflasyon arasındaki eşik seviyesini ve asimetrik bağlantıyı araştırmaktır. Ampirik sonuçlar, bütçe açığı arttıkça, özellikle politik risk endeksinin daha yüksek seviyelerinde enflasyon oranının da arttığını göstermektedir. Bu durum 'Tanzi etkisinin' geçerliliğini göstermektedir. Aksine, politik risk endeksinin düşük olduğu ülkelerde, enflasyon oranı arttıkça bütçe açığı azalmakta ve bu da 'Patinkin etkisi'nin geçerliliğini göstermektedir.

Anahtar Kelimeler

• Yumuşak Geçişli Panel Regresyon Modeli
• Bütçe Açıkları
• Enflasyon
• Politik Risk Endeksi
• 11 AB Ülkesi

Kaynakça

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