Should Public Expenditures Be Used as a Political Tool on Growth? An Empirical Analysis with VECM Analysis and Structural Break Tests: 1984-2014 Turkey Model

It has been discussed by different ecoles for many years in the economics literature that whether the public expenditures affect the growth or not. For this reason, the effect of public expenditures on growth in Turkey example between years 1984-2014 is investigated through various econometric methods. The econometric tests conducted in this research are, respectively, Quandt-Andrews unknown break point test, Clemente Montanes Reyes unit root test, Gregory Hansen cointegration test, Fully Modified Ordinary Least Squares (FMOLS) test, Vector Error Correction Model (VECM), VECM Wald test, VECM variance decomposition test and VECM impulse response functions test. As a result of all these tests, on the basis of inspected period, the data reveal that the usage of public expenditures as a political tool does not provide economic growth.