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Effects of Income Distribution and Fiscal Policy on Growth in Turkey: A Kaleckian Analysis

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  • Eda Yilmaz
  • Serdal Bahçe

Abstract

This study examines the effects of functional income distribution and fiscal policy on growth in Turkey. A post-Kaleckian open economy model is used to analyze the Turkish economy by integrating fiscal policy tools into the econometric model, such as tax burdens on labor and capital and government expenditure for 1988–2017. The novelty of our study is that it considers the private profit motive and rollback of government activities by including public-private partnership investments in the model. Our findings suggest that government ideologies in providing services through different channels do not cause alteration in the domestic demand regime; it stays wage-led in all scenarios we applied. Yet, the overall regime turns out to be profit-led since net export is sensitive to labor costs. JEL Classification: E12, E62, L33

Suggested Citation

  • Eda Yilmaz & Serdal Bahçe, 2025. "Effects of Income Distribution and Fiscal Policy on Growth in Turkey: A Kaleckian Analysis," Review of Radical Political Economics, Union for Radical Political Economics, vol. 57(2), pages 197-220, June.
    • Handle: RePEc:sae:reorpe:v:57:y:2025:i:2:p:197-220
    DOI: 10.1177/04866134241276281
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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