Analysis of the Relationship Between Government Spending and Economic Growth with Structural Breaks in Turkey


Pata U. K. , Tutuncu A.

MALIYE DERGISI, no.172, pp.30-51, 2017 (Journal Indexed in ESCI) identifier

  • Publication Type: Article / Article
  • Volume: Issue: 172
  • Publication Date: 2017
  • Title of Journal : MALIYE DERGISI
  • Page Numbers: pp.30-51

Abstract

The role of the government in the economy was examined empirically by the tests of the Wagner and Keynes hypotheses after the 1900s. In this study, the relations between economic growth and government spending were examined by structural breaks cointegration test for Turkey over the period 1960-2015. According to Maki cointegration test, FMOLS, DOLS and error correction model results, there is a unidirectional causality going from goverment spending to economic growth both at micro and macroeconomic levels in the short-long run. The results of this study strongly support the Keynesian hypothesis. Therefore, public expenditures have an important role in the Turkish economy.