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Is There Any Time-Varying Relationship between Fiscal and Trade Deficits in Turkey?

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  • Barış Gök
  • Abdurrahman Nazif Çatık

Abstract

In this article we analyse the evolution of the relationship between budget and trade deficits in Turkey covering the period 1985:1 to 2013:4. The structural break tests suggest the existence of a regime shift after the severe 2001 crisis. Time-varying responses obtained from the TVP-VAR model up to 2003 support the Keynesian view by providing evidence in favour of twin deficits, whereas the remaining responses suggest the remarkable divergence between fiscal and trade deficits.

Suggested Citation

  • Barış Gök & Abdurrahman Nazif Çatık, 2016. "Is There Any Time-Varying Relationship between Fiscal and Trade Deficits in Turkey?," Prague Economic Papers, University of Economics, Prague, vol. 2016(5), pages 607-616.
  • Handle: RePEc:prg:jnlpep:v:2016:y:2016:i:5:id:577:p:607-616
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    References listed on IDEAS

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    More about this item

    Keywords

    Turkey; TVP-VAR model; current account; budget account;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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