IDEAS home Printed from https://ideas.repec.org/a/ddj/fseeai/y2016i3p34-43.html
   My bibliography  Save this article

The Cost of Economic Growth in Turkey: Unavoidable Increase in Current Deficit

Author

Listed:
  • Emine Turkan AYVAZ GUVEN

    (Celal Bayar University, Ahmetli V.H.S, Turkey)

Abstract

In this study, the relationship between economic growth and current deficit is analyzed for Turkish economy with the annual data covering the period 1990-2015. Two variables; one is gross domestic product and the other one is current deficit, have taken place in the analyses. Time series data related to variables have been tested with ADF and PP Unit Root Tests, and it has been observed that the variables are stationary in the first level. In order to determine the causality relationship between variables, Granger Causality Test has been applied, and a unidirectional causality relationship from economic growth to current deficit has been found. Finally, Regression and Correlation Analyses have been applied in order to determine the direction and the degree of the relationship. The Regression Analysis has revealed that 1% increase in economic growth causes 3.43% increase in current deficit. In other words, the increase in growth causes increase in current deficit by affecting the balance of current account in a bad way.

Suggested Citation

  • Emine Turkan AYVAZ GUVEN, 2016. "The Cost of Economic Growth in Turkey: Unavoidable Increase in Current Deficit," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 3, pages 34-43.
  • Handle: RePEc:ddj:fseeai:y:2016:i:3:p:34-43
    as

    Download full text from publisher

    File URL: http://www.eia.feaa.ugal.ro/images/eia/2016_3/Guven.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Chinn, Menzie D. & Prasad, Eswar S., 2003. "Medium-term determinants of current accounts in industrial and developing countries: an empirical exploration," Journal of International Economics, Elsevier, vol. 59(1), pages 47-76, January.
    2. Nouriel Roubini & Paul Wachtel, 1997. "Current Account Sustainability in Transition Economies," Working Papers 97-03, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. Maria Milesi-Ferretti, Gian & Razin, Assaf, 1998. "Sharp reductions in current account deficits An empirical analysis," European Economic Review, Elsevier, vol. 42(3-5), pages 897-908, May.
    4. Calderon Cesar Augusto & Chong Alberto & Loayza Norman V., 2002. "Determinants of Current Account Deficits in Developing Countries," The B.E. Journal of Macroeconomics, De Gruyter, vol. 2(1), pages 1-33, March.
    5. Czech, Brian, 2000. "Economic growth as the limiting factor for wildlife conservation," MPRA Paper 9038, University Library of Munich, Germany.
    6. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-258, June.
    7. Alberto Bagnai & Stefano Manzocchi, 1999. "Current-Account Reversals in Developing Countries: The Role of Fundamentals," Open Economies Review, Springer, vol. 10(2), pages 143-163, May.
    8. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    9. Hamid Faruqee & Guy Debelle, 1996. "What Determines the Current Account? a Cross-Sectional and Panel Approach," IMF Working Papers 96/58, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ddj:fseeai:y:2016:i:3:p:34-43. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gianina Mihai). General contact details of provider: http://edirc.repec.org/data/fegalro.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.