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Twin Deficit Hypothesis: Evidence from the Turkish Economy = İkiz Açıklar Hipotezi: Türkiye Ekonomisinden Kanıtlar

Author(s): Sabri AZGÜN

Journal: Dogus University Journal
ISSN 1302-6739

Volume: 13;
Issue: 2;
Start page: 189;
Date: 2012;
Original page

Keywords: Budget Deficits | Current Account Deficits | Causality | Bütçe Açıkları | Cari İşlemler Açıkları | Nedensellik

The Turkish economy has functioned according to the outward-oriented growth model since 24 January 1980, when structural changes and transformation decisions were agreed upon. However, chronic external deficit problems have been encountered since the adoption of the outward-oriented growth model. The purpose of this study is to test the hypothesis of twin deficits for period 1980-2009 in Turkish economy. In this context, the relationship between budget deficits and current account deficits have been examined theoretically. And the direction of this relationship has been analyzed empirically by means of the VAR Granger causality test and regression analysis. The findings reveal that there is in fact a causality relationship from the budget deficits towards current account deficits.
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