Inderscience Publishers

Is fiscal policy really sustainable in Turkey? A reexamination

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The primary purpose of this paper is to reexamine empirically the sustainability of fiscal policy in Turkey and to identify whether it is strong or weak for the 1975–2012 period. In the paper, we followed the model of Hakkio and Rush (1991) along with its developed version by Quintos (1995). Unlike a large number of previous studies, in this paper we attempted to examine decomposed effects of government expenditure and government revenue on fiscal sustainability by considering functional components. The empirical findings of the paper supported the findings of most previous studies on fiscal sustainability in Turkey and revealed that the sustainability of fiscal policy was quite weak in Turkey in the long–run.

Keywords: fiscal policy, fiscal sustainability, government budget constraints, Turkey, government expenditure, government revenue

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