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AUTHOR(S): Özcan Karahan
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TITLE Analysing the Presence of “Triple Deficit” in Turkey’s Economy |
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ABSTRACT Detailed determination and effective control of the factors causing the current account deficit is of great importance for the economies of developing countries. In the framework of the concept called "twin deficit", the imbalances in the current account arise from either a budget deficit or an investment-saving gap. Besides, budget deficits and investment-saving gap together can cause to current account imbalances. This situation is called “triple deficit” and in this case, current account imbalances can cause serious problems for the economies. Therefore, researches aiming to determine the causes of the current account deficit in developing countries have become very popular in the literature. Because the analysis of the domestic demand dynamics constituting the current account deficit is of great importance in terms of effectively identifying the policies aimed at eliminating the risks arising from these deficits. From this point of view, the aim of our study is, by using quarterly data between 2003 and 2018, to analyze the presence of “triple deficit” in Turkey. Accordingly, the effects of both the public budget deficit and the private sector investment-saving gap on the current account imbalance have been examined within the framework of the ARDL Model. Empirical results show the presence of the triple deficit for Turkey's economy. Moreover, the negative effect of the private investment-savings gap on the current account deficit is much greater compared to the public budget deficit. From the point of policy implication, these results indicate that applications aiming to compensate for the savings inability are more effective to close the current account deficit in Turkey. In other words, a policy strategy aiming at eliminating the lack of savings should be adopted in order to solve the current deficit problem. |
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KEYWORDS Triple Deficit, Turkey, ARDL Model |
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Cite this paper Özcan Karahan. (2021) Analysing the Presence of “Triple Deficit” in Turkey’s Economy. International Journal of Economics and Management Systems, 6, 537-546 |
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