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Sustainability of the fiscal deficit in Turkey: evidence from cointegration and multicointegration tests

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  • Burcu Kiran

Abstract

This paper investigates the fiscal deficit sustainability of Turkey over the period 1975–2008 by using both cointegration and multicointegration methods. In addition to the conventional unit root tests, the minimum LM unit root test with one structural break is used to examine the time series properties of government expenditures and revenues. Since the series are I(1) , the study next implements a cointegration method with an endogenous break. The cointegrating vector estimations from the DOLS procedure indicate that the fiscal deficit is weakly sustainable. This paper also uses one-step multicointegration method to test whether the fiscal process is truly sustainable in Turkey. The results show that the fiscal system in Turkey is multicointegrated and sustainable.

Suggested Citation

  • Burcu Kiran, 2011. "Sustainability of the fiscal deficit in Turkey: evidence from cointegration and multicointegration tests," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 3(1), pages 63-76.
    • Handle: RePEc:ids:ijsuse:v:3:y:2011:i:1:p:63-76
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    Cited by:

    1. Cysne, Rubens Penha & Campos, Eduardo Lima, 2019. "Sustainability of the Brazilian public pebt an analysis using multicointegration," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 805, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).

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