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Econometric Analysis Of The Relationship Between Budget Deficit, Monetary Growth And Inflation In Turkey- 1992–2006

Author

Listed:
  • Halil Altintas
  • Hakan Cetintas
  • Sami Taban

    (Kahramanmaras University
    usak University)

Abstract

Empirical investigations examining the relationship between budget deficits, monetary growth and inflation have not reached a consensus on the possible relationship between deficits, monetary growth and the rate of inflation. But the major outcome from the empirical studies indicated strong evidence that a budget deficit financed through monetisation and a rising money supply could lead to inflation. The inflationaryeffect of budget deficits depends on the means by which the deficit is financed and the impact of that on aggregate demand. In this study, budget deficits, monetary growth and inflation relationships are investigated by utilizing the ARDLbounds testing approach for Turkey over the period 1992:1-2006:12. While empirical results show that there is a statistically positive relationship between monetary growth and inflation in both long and short run, no connection found between inflation and budget deficit in the both runs.

Suggested Citation

  • Halil Altintas & Hakan Cetintas & Sami Taban, 2008. "Econometric Analysis Of The Relationship Between Budget Deficit, Monetary Growth And Inflation In Turkey- 1992–2006," Anadolu University Journal of Social Sciences, Anadolu University, vol. 8(2), pages 185-208, December.
    • Handle: RePEc:and:journl:v:8:y:2008:i:8:p:185-208
    as

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    File URL: http://www.anadolu.edu.tr/arastirma/hakemli_dergiler/sosyal_bilimler/pdf/2008-2/2008_02_10.pdf
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    More about this item

    Keywords

    Budget Deficit; Monetary Growth and Inflation; Bound Test; Turkish Economy.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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