Twin Deficit Hypothesis and Reverse Causality: An Empirical Study on Turkish Economy

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dc.contributor.authorDugru, Meltem
dc.date.accessioned2024-06-12T10:58:59Z
dc.date.available2024-06-12T10:58:59Z
dc.date.issued2020
dc.departmentTrakya Üniversitesien_US
dc.description.abstractThe twin deficit hypothesis is a hypothesis suggesting that the current deficit and the budget deficit move together. According to this hypothesis, the existence of a relationship between two variables is handled in different ways. While the Traditional Keynesian View argues that there is causality from the budget deficit to the current deficit, the Ricardian Equivalence Hypothesis claims that there is no relationship between two variables. The Current Account Targeting view, named by Summers, is that there is causality from the current deficit to the budget deficit, contrary to the Keynesian theory. The twin deficit, affecting both developed and developing countries as a result of liberalization experienced in the 1980s, continues to be the problem of countries today. In this study, Turkey's current deficit and budget deficit were investigated whether there was any interaction between these variables. In order to determine the direction and degree of this interaction, it was tried to obtain a result about the existence of the concept of reverse causality within the framework of the twin deficit hypothesis between 2009: 1Q and 2020: 2Q. For the budget deficit and current deficit data compiled as time series, cointegration analysis and the bound test based on the Autoregressive Distributed Lag model approach were applied. Then, the direction of causality was determined with the Error Correction Model. As a result of the analysis, it was determined that the direction of the relationship between two variables is negative in the long term and positive in the short term. According to these results, while the Current Account Targeting view is supported by the short term findings, the Keynesian view is rejected.en_US
dc.identifier.doi10.26650/ISTJECON2020-831500
dc.identifier.endpage437en_US
dc.identifier.issn2602-4152
dc.identifier.issn2602-3954
dc.identifier.issue2en_US
dc.identifier.startpage415en_US
dc.identifier.urihttps://doi.org/10.26650/ISTJECON2020-831500
dc.identifier.urihttps://hdl.handle.net/20.500.14551/20273
dc.identifier.volume70en_US
dc.identifier.wosWOS:000848721800008en_US
dc.identifier.wosqualityN/Aen_US
dc.indekslendigikaynakWeb of Scienceen_US
dc.language.isotren_US
dc.publisherIstanbul Univen_US
dc.relation.ispartofIstanbul Iktisat Dergisi-Istanbul Journal Of Economicsen_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/closedAccessen_US
dc.subjectCurrent Deficiten_US
dc.subjectBudget Deficiten_US
dc.subjectTwin Deficit Hypothesisen_US
dc.subjectCurrent Account Targetingen_US
dc.titleTwin Deficit Hypothesis and Reverse Causality: An Empirical Study on Turkish Economyen_US
dc.typeArticleen_US

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