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Validity of the Triple Deficit Hypothesis in Turkey Bounds Test Approach

Merter Akinci and Ömer Yilmaz

Istanbul Stock Exchange Review, 2012, vol. 13, issue 50, 1-28

Abstract: The current account deficits that reached the critical proportions together with the acceleration of the globalization process, have exited considerable interest among researchers and policy makers. To have a clear understanding of its role in macroeconomic outcomes, a lot of researches were made and these showed that increasing current deficits had dragged the countries into the financial crises. Therefore, due to its growing importance for all countries, the relationships among the current deficits, saving deficits and budget deficits of Turkey in the period of 1975 – 2010 were analysed through econometrical methods. Time series datas belong to the variables were tested with ADF and PP unit root tests and it was observed that the variable of the current deficit was stable in its level value and the variables of the saving deficit and budget deficit were stable in their first difference values. In order to determine the cointegration relationship between the variables, the bounds test analysis was applied and the cointegrated relations between the variables was found. The results of the analysis showed that the saving deficits an budget deficits had a positive effect on the current deficits both in short and long-run and triple deficits were valid for the Turkish economy.

Keywords: Current Account Deficits; Saving Deficits; Budget Deficits; Triple Deficits; Bounds Test Approach (search for similar items in EconPapers)
JEL-codes: C22 E62 F32 H62 H72 (search for similar items in EconPapers)
Date: 2012
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