Is There A Relationship Between The Budget Balance And Financial Account Balance In Turkey?

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The relationship between the government budget balance and other macroeconomic variables has drawn attention from economists for a long time. In this context it is argued that there would be a relation between the budget balance and financial account balance. Theory suggests that the budget balance and financial account balance would affect each other through different channels. This paper examines the relationship between the central government budget balance and financial account balance in Turkey by using annual data over the period 1975-2014 and employing ARDL approach to co-integration and Toda-Yamamoto approach to test for Granger causality. ARDL bounds testing results indicate that there is no long run relationship between the budget balance and financial account balance during the period examined. However, Granger causality tests suggest that there is a bi-directional causality between the budget balance and financial account balance

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Budget balance , financial account balance , co , integration , causality

Journal Of Management an‎d Economics

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Journal Of Management an‎d Economics