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Testing The Validity Of The Bars Curve For Turkey

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  • Ayşegül Durucan

Abstract

This study has two main aims: to test the validity of the BARS curve in Turkey for the period 1974–2016 and to estimate the optimal government size for that period and compare it with the current situation. It uses the Autoregressive Distributed Lag bounds test and quadratic equation methods. The empirical findings of the study confirm the validity of the BARS curve by providing strong evidence for the existence of an inverted U-shaped long-run relationship between government size and economic growth. Unlike many previous studies that use a single proxy measure for government size, this study uses all available fundamental indicators and their sub-components. The empirical results show that for the period studied all proxy measures of government size exceed the optimal except for total central government budget expenditure and defence expenditure. Therefore, decreasing the size of the government, other than for these two indicators, will increase economic growth in the long run.

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  • Ayşegül Durucan, 2022. "Testing The Validity Of The Bars Curve For Turkey," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(232), pages 153-192, January –.
    • Handle: RePEc:beo:journl:v:67:y:2022:i:232:p:153-192
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    1. Suleyman Kasal, 2023. "Analysing The Armey Curve Based On The Fourier Cointegration Approach For Turkey," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 139-158, January –.

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    More about this item

    Keywords

    government size; economic growth; ARDL bounds test; Turkey;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other

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