BUDGET DEFICIT SUSTAINABILITY: AN APPLICATION TO TURKEY

In this study, sustainability of budget deficits in Turkey is examined empirically for the period from January 2006 to September 2020, using time series techniques based on monthly data, under the intertemporal budget constraint approach. In the analysis phase, the Johansen cointegration method was used for the long-term relationship of the series. Analysis results indicated that income and expenditure series are not cointegrated. It is concluded that budget policies for the period under consideration in Turkey are unsustainable; therefore, the applied fiscal policies should be reviewed.