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Turkish budget deficit sustainability and the revenue-expenditure nexus

Author

Listed:
  • James Payne
  • Hassan Mohammadi
  • Murat Cak

Abstract

The sustainability of the Turkish budget deficits as well as the dynamics of government revenues and expenditures in controlling the size of the deficit is examined using annual data from 1968 to 2004. The findings support the existence of a long-run relation between government revenues and expenditures once allowance is made for an unknown structural break. However, the size of the slope parameter is significantly less than one, suggesting that the government might face difficulties in financing its future debt. With respect to the revenue-expenditure nexus, the empirical evidence is favourable to the tax-spend hypothesis through the error correction term in the expenditures equation. Finally, there is no evidence of asymmetries in the adjustment process in either the threshhold autoregressive or momentum threshold autoregressive specifications of the budgetary adjustment process.

Suggested Citation

  • James Payne & Hassan Mohammadi & Murat Cak, 2008. "Turkish budget deficit sustainability and the revenue-expenditure nexus," Applied Economics, Taylor & Francis Journals, vol. 40(7), pages 823-830.
  • Handle: RePEc:taf:applec:v:40:y:2008:i:7:p:823-830
    DOI: 10.1080/00036840600749904
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    Citations

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    Cited by:

    1. Andrew Phiri, 2018. "How sustainable are fiscal budgets in the Kingdom of Swaziland?," Working Papers 1810, Department of Economics, Nelson Mandela University, revised Mar 2018.
    2. repec:fgv:epgrbe:v:71:y:2017:i:3:a:66468 is not listed on IDEAS
    3. HYE, Qazi Muhammad Adnan & M Anwar, Jalil, 2010. "Revenue and Expenditure Nexus: A Case Study of Romania," MPRA Paper 32132, University Library of Munich, Germany.
    4. Saunoris, James W. & Payne, James E., 2010. "Tax more or spend less? Asymmetries in the UK revenue-expenditure nexus," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 478-487, July.
    5. Vasco Gabriel & Pataaree Sangduan, 2011. "Assessing fiscal sustainability subject to policy changes: a Markov switching cointegration approach," Empirical Economics, Springer, vol. 41(2), pages 371-385, October.
    6. repec:bla:sajeco:v:84:y:2016:i:4:p:520-537 is not listed on IDEAS
    7. Chen, Shyh-Wei, 2014. "Testing for fiscal sustainability: New evidence from the G-7 and some European countries," Economic Modelling, Elsevier, vol. 37(C), pages 1-15.
    8. Marco Tronzano, 2013. "The Sustainability of Indian Fiscal Policy: A Reassessment of the Empirical Evidence," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(S1), pages 63-76, January.
    9. Phiri, Andrew, 2016. "Asymmetries in the revenue-expenditure nexus: New evidence from South Africa," MPRA Paper 75224, University Library of Munich, Germany.
    10. Ismet GOCER & Mehmet MERCAN, 2016. "Which country after Greece? Sustainability of budget deficits in selected EU countries: A panel cointegration analysis with multiple structural breaks under cross-section dependence," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(608), A), pages 205-220, Autumn.
    11. Ata Ozkaya, 2013. "The Effects of Debt Intolerance and Public Debt Sustainability on Credit Ratings: Evidence From European Economies," Working Papers 011, Bahcesehir University, Betam.
    12. Ismet GOCER & Mehmet MERCAN, 2016. "Which country after Greece? Sustainability of budget deficits in selected EU countries: A panel cointegration analysis with multiple structural breaks under cross-section dependence," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(608), A), pages 205-220, Autumn.
    13. George A. Vamvoukas, 2011. "Panel Data Modeling and the Tax-Spend Controversy in the Euro Zone," Post-Print hal-00716629, HAL.
    14. Marco Tronzano, 2013. "The Sustainability of Indian Fiscal Policy: A Reassessment of the Empirical Evidence," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(S1), pages 63-76, January.
    15. Trachanas, Emmanouil & Katrakilidis, Constantinos, 2013. "Fiscal deficits under financial pressure and insolvency: Evidence for Italy, Greece and Spain," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 730-749.

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