THE VALIDITY OF TWIN DEFICITS HYPOTHESIS: THE CASE OF TURKEY
İKİZ AÇIK HİPOTEZİNİN GEÇERLİLİĞİ: TÜRKİYE ÖRNEĞİ

Author : Sefa ÖZBEK - Ferit ÖNDER - Enver GÜNAY
Number of pages : 501-515

Abstract

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

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