ISSN:2149-0821

THE VALIDITY OF TWIN DEFICITS HYPOTHESIS: THE CASE OF TURKEY


The twin deficit hypothesis implies that budget deficit and current account deficit are seen together in an economy. Budget deficit and current account deficit are seen as a problem for both developed and developing countries. Although there have been serious reductions in the budget deficits in Turkey in recent years, the current account deficit has stayed high. There are different views on the twin deficit in the economic literature. According to the traditional Keynesian view, budget deficits are claimed to cause the current account deficit. According to Ricardian equivalence hypothesis, it is claimed that there is no relationship between current account deficit and budget deficit. In this study, the twin deficit hypothesis for Turkey is tested by using time series analysis for the period of 1980-2017. Our results support the Traditional Keynesian view


Keywords


Current Account Deficit, Budget Deficit, Twin Deficit Hypothesis, Turkey

Author : Sefa ÖZBEK - Ferit ÖNDER - Enver GÜNAY
Number of pages: 501-515
DOI: http://dx.doi.org/10.29228/SOBIDER.39761
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The Journal of Social Sciences
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