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Government Budget Deficits, Defence Expenditure And Income Distribution: The Case Of Turkey

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  • Onur Ozsoy

Abstract

This paper analyzes the relationship between government budget deficits, defence expenditure and income redistribution among different social-income groups in Turkey for the period 1965-2003. The analysis was based on a five-equation vector auto regressive (VAR) model and impulse response functions (IRFs) derived from the VAR model. The study finds that the deficit as a percentage of GNP has a negative and significant impact on transfer payments as a percentage of GNP. The IRFs indicate that shocks to deficit expenditures as a percentage of GNP (DEFGNP) have statistically significant impacts on defence spending as a percentage of GNP (DSGNP), educational expenditures as a percentage of GNP (EDGNP), health expenditures as a percentage of GNP (HEGNP), and transfer payments as a percentage of GNP (TPGNP). The results derived from this study also indicate that there is a positive and significant relationship between defence spending as a percentage of GNP and deficits as a percentage of GNP. Therefore, defence spending is viewed as a tool for transferring income among different social-income groups and across generations in Turkey for the period 1965-2004. As a result of this, the government can use deficit and defence spending as one of the major instruments to transfer income among different social-income groups and across generations in Turkey.

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  • Onur Ozsoy, 2008. "Government Budget Deficits, Defence Expenditure And Income Distribution: The Case Of Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(1), pages 61-75.
    • Handle: RePEc:taf:defpea:v:19:y:2008:i:1:p:61-75
    DOI: 10.1080/10242690701347689
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