The Effects of Political Fragmentation on Fiscal Deficits in Turkey

Yesim Kustepeli () and Gulcan Onel
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Yesim Kustepeli: Department of Economics, Faculty of Business, Dokuz Eylül University

No 05/02, Discussion Paper Series from Dokuz Eylül University, Faculty of Business, Department of Economics

Abstract: Recent theoretical and empirical research has considered how differences in political arrangements affecting national policy formation might explain variation in fiscal policies pursued (Volkerink and de Haan, 2001). The experience of high government deficits of developed nations in the 1980s led researchers to analyze the reasons for this and among other factors they have argued that political variables could also explain budget deficits (Sutter, 2003). This study aims to investigate the effects of the political parties for fiscal deficits in Turkey for 1976-2004 period. Our results show that the most important variable in explaining the budget deficit to GDP ratio in Turkey is its lagged value. The political dispersion index variable, which measures the effect of the number of parties in the government in power, has proven to have a minor effect. Only the coalition governments with two or more parties are found to have higher budget deficit to GDP ratios. Ideology of the governments in power is important for the budget deficit to GDP ratio when it is considered with the number of parties in the government in power. In general, it can be said that polarization, fragmentation and ideology of the governments do not play an important role in explaining the budget deficit to GDP ratio.

Keywords: Budget deficits; political fragmentation; dispersion indexes (search for similar items in EconPapers)
Pages: 11 pages
Date: 2005-11-23, Revised 2005-11-23
New Economics Papers: this item is included in nep-cwa, nep-mac, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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