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Optimal Size of Government in Turkey

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  • Taner Turan

    (Adana Science and Technology University, Adana, Turkey.)

Abstract

This paper examines the relationship between a size of the government and the economic growth and estimates the optimal size of the government for Turkey by using two different specifications. We find that the optimal size of the central government varies from 8.8 (15.4) to 9.1 (17) percent of GDP for 1950-2012 (1970-2012) period, depending on the specification. The optimal size of the central government expenditures excluding the interest payments is 14.4 percent of GDP. The actual rates have been well above the estimated optimal ones for a long time. The results of our quadratic specification also suggest that Armey curve is valid for Turkey during the period examined. We find that the estimated optimal sizes of the government from different specifications are consistent with each other, but there is a substantial variation in the size when different time periods are used. This shows that Armey curve is sensitive to change in the time periods. Our results clearly point out that the Turkish government should cut its expenditures in order to have a growth maximizinzing size.

Suggested Citation

  • Taner Turan, 2014. "Optimal Size of Government in Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 4(2), pages 286-294.
    • Handle: RePEc:eco:journ1:2014-02-6
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    References listed on IDEAS

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    Cited by:

    1. Francesca Bartolacci & Rosanna Salvia & Giovanni Quaranta & Luca Salvati, 2022. "Seeking the Optimal Dimension of Local Administrative Units: A Reflection on Urban Concentration and Changes in Municipal Size," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    2. Pelin Varol Iyidogan & Taner Turan, 2017. "Government Size and Economic Growth in Turkey: A Threshold Regression Analysis," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(2), pages 142-154.
    3. Suleyman Kasal, 2023. "Analysing The Armey Curve Based On The Fourier Cointegration Approach For Turkey," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 139-158, January –.
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    More about this item

    Keywords

    optimal government size; government size and growth; Turkey;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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