Fiscal sustainability test: The case of Turkey
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Published
Jan 12, 2017
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Abstract
The main purpose of the study is to test the sustainability of fiscal policies for Turkish economy using quarterly series over the period 2000:1 to 2015:2. By considering Kremers (1989) sustainability condition we test the debt-income ratio by using Lee-Strazicich unit root test which allow structural breaks under both null and alternative hypothesis. The test results we obtained show that the series has a unit root which indicates the un-sustainability of public debt.
Keywords: Fiscal policies, Fiscal Sustainability, Unit root test
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Yol, M.A. (2009). Testing the Sustainability of Current Account Deficits in Developing Economies: Evidence from Egypt, Morocco, and Tunisia. The Journal of Developing Areas, 43(1), 177-197.
Zıvot, E., Andrews, D. (1992). Further Evidence On The Great Crash, The Oilprice Shock, And The Unit Root Hypothesis. Journal Of Business & Economic Statistics, 10(3), 251-270.
Shyh-Wei Chen, (2014). Testing for fiscal sustainability: New evidence from the G-7 and some European countries, Economic Modelling, 37, 1-15.
Ehrhart, C. & Llorca, M. (2008). The Sustainability of Fiscal Policy: Evidence from a Panel of Six South-Mediterranean Countries. Applied Economics Letters, 15, 797-803.
Hepsağ, A. (2011). Mali Politikaların Sürdürülebilirliğinin Yapısal Kırılmalı Periyodik Birim Kök Testi ile Analizi: Türkiye Örneği. Doğuş Üniversitesi Dergisi, 12(1), 32-45.
Joseph, S. A. (2010). Financing Recovery: Implications of Natural Disaster Expenditure on the Fiscal Sustainability of the Eastern Caribbean Currency Unit (ECCU) States. Journal of Business, Finance and Economics in Emerging Economies, 5(2), 39-80.
Kremers, J.J.M., (1989). U.S. Federal Indebtedness and the Conduct of Fiscal Policy. Journal of Monetary Economics, 23, 219-238.
Lumsdaıne, R.L., & Papell, D.H. (1997). Multiple Trend Breaks And The Unit Root Hypothesis. The Review Of Economics And Statistics, 79(2), 212- 218.
Lee, J., & Strazıcıch, M.C. (2003). Minimum Lagrange Multiplier Unit Root Test With Two Structural Breaks. The Review Of Economics And Statistics, 85(4), 1082-1089.
Marks, V.S. (2004). Fiscal Sustainability and Solvency: Theory and Recent Experience in Indonesia. Bulletin of Indonesia Economic Studies, 40(2), 227-242.
Perron, P. (1989). The Great Crash, The Oil Price Shock, And The Unit Root Hypothesis, Econometrica, 57(6), 1361-1401.
Yol, M.A. (2009). Testing the Sustainability of Current Account Deficits in Developing Economies: Evidence from Egypt, Morocco, and Tunisia. The Journal of Developing Areas, 43(1), 177-197.
Zıvot, E., Andrews, D. (1992). Further Evidence On The Great Crash, The Oilprice Shock, And The Unit Root Hypothesis. Journal Of Business & Economic Statistics, 10(3), 251-270.