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DO GOVERNMENT EXPENDITURES AND TRADE DEFICITS AFFECT EACH OTHER IN THE SAME WAY? EVIDENCE FROM TURKEY

Ekonomski vjesnik/Econviews

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Title DO GOVERNMENT EXPENDITURES AND TRADE DEFICITS AFFECT EACH OTHER IN THE SAME WAY? EVIDENCE FROM TURKEY
 
Creator Bayat, Tayfur
Tasar, Izzet
Kayhan, Selim
Acci, Yunus
 
Description The purpose of this study is to determine the causality between trade deficits and government expenditure for the Turkish economy in different time horizons and in the case of different shock types between year 1987 and 2014. By doing so, we aim to understand whether the twin deficit hypothesis is valid in the Turkish economy or whether government expenditures have more ability to cause the movements of trade deficit. To do this, we employ asymmetric causality test developed by Hatemi-J (2012) and Hatemi-J and Roca (2014) and rolling windows causality test developed by Balcilar et al. (2010) methods. Results obtained from all tests imply that there is a bi-directional causality between variables. Different from other causality analysis, asymmetric causality analysis results indicate that an increase in government expenditures reduces trade deficit contrarily to existing literature. This means twin divergence hypothesis might be valid in the Turkish economy instead of twin deficit hypothesis.Keywords: Asymmetric causality, government expenditures, trade deficit, twin divergence hypothesis
 
Publisher Faculty of Economics in Osijek
 
Contributor —
 
Date 2017-06-29
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier http://hrcak.srce.hr/ojs/index.php/ekonomski-vjesnik/article/view/4871
 
Source Ekonomski vjesnik/Econviews - Review of Contemporary Business, Entrepreneurship and Economic Issues; Vol 30, No 1 (2017)
Ekonomski vjesnik/Econviews - Review of Contemporary Business, Entrepreneurship and Economic Issues; Vol 30, No 1 (2017)
1847-2206
0353-359X
 
Language eng
 
Relation http://hrcak.srce.hr/ojs/index.php/ekonomski-vjesnik/article/view/4871/2941
 
Rights Copyright (c) 2017 Ekonomski vjesnik/Econviews - Review of Contemporary Business, Entrepreneurship and Economic Issues