Halil Altintas Hakan Cetintas Sami Taban () (Kahramanmaras University, usak University)
Abstract
Empirical investigations examining the relationship between budget deficits, monetary growth and inflation have not reached a consensus on the possible relationship between deficits, monetary growth and the rate of inflation. But the major outcome from the empirical studies indicated strong evidence that a budget deficit financed through monetisation and a rising money supply could lead to inflation. The inflationaryeffect of budget deficits depends on the means by which the deficit is financed and the impact of that on aggregate demand. In this study, budget deficits, monetary growth and inflation relationships are investigated by utilizing the ARDLbounds testing approach for Turkey over the period 1992:1-2006:12. While empirical results show that there is a statistically positive relationship between monetary growth and inflation in both long and short run, no connection found between inflation and budget deficit in the both runs.
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Volume (Year): 8 (2008) Issue (Month): 2 (December) Pages: 185-208 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation C01 - Mathematical and Quantitative Methods - - General - - - Econometrics E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy