THE RELATIONSHIP BETWEEN CURRENT ACCOUNT DEFICIT BUDGET DEFICIT: A RESEARCH ON TURKEY

Abstract

This study aims to investigate whether there is a relationship between budgetary deficit and current accounts deficit in Turkey in line with the literature studies and methodologies. In the study, the relationship between current accounts deficit and budgetary deficit in Turkey was investigated by the time series analysis using annual data. For this purpose, the current accounts deficit and the budgetary deficit datasets were used. The current accounts deficit data were provided from State Planning Organization, and the budget deficit data were provided from the Ministry of Finance Directorate General of Budget and Fiscal Control. The data on the current accounts deficit and budgetary deficit variables cover the 1950-2012 period. In the study, the relationship between the current accounts deficit and budgetary deficit were investigated using Granger causality test. As a result of the causality test, a long-term, stable and two-way relationship was found between the current accounts deficit and budgetary deficit in Turkey.