Sustainability of Fiscal Policy: Estimating a Fiscal Reaction Function for Turkey

Vural G.

Uluslararası Yönetim İktisat ve İşletme Dergisi, vol.14, no.2, pp.357-362, 2018 (Peer-Reviewed Journal)

  • Publication Type: Article / Article
  • Volume: 14 Issue: 2
  • Publication Date: 2018
  • Journal Name: Uluslararası Yönetim İktisat ve İşletme Dergisi
  • Journal Indexes: TR DİZİN (ULAKBİM)
  • Page Numbers: pp.357-362


In this study a Fiscal policy analysis is used for Turkey between the periods 2006:12016:2
to assess the sustainability of fiscal policy. A fiscal reaction function is estimated to
analyze the effects of public debt and fluctuations in GDP on the primary balance. The fiscal
reaction function is obtained from the intertemporal government budget constraint in order
to depict the behaviour of government towards the public debt. The results suggest that the
primary budget balance reacts significantly to the previous increase in GDP gap.
Keywords: Fiscal Policy, Debt Sustainability, Fiscal Reaction Function.