A TIME-VARYING ANALYSIS OF THE PUBLIC DEBT SUSTAINABILITY IN TURKEY WITH FLEXIBLE LEAST SQUARES TECHNIQUE


Can K.

Uluslararası İktisadi ve İdari İncelemeler Dergisi, sa.31, ss.129-144, 2021 (Hakemli Üniversite Dergisi)

  • Yayın Türü: Makale / Tam Makale
  • Basım Tarihi: 2021
  • Doi Numarası: 10.18092/ulikidince.827340
  • Dergi Adı: Uluslararası İktisadi ve İdari İncelemeler Dergisi
  • Sayfa Sayıları: ss.129-144

Özet

This paper gauges the sustainability of public debt in Turkey from a time-varying perspective. The time-varying estimation techniques exhibit the whole portrait of intertemporal variations in the sustainability of public debt. We estimated a fiscal reaction function using flexible least squares method to reap this benefit of time-varying models. This method is a practical alternative to the other approaches in the literature. The results suggest that public debt sustainability has been established in Turkey through a transformation in the early 2000s, but thereafter the fiscal performance has waned gradually. In recent years, the fiscal reaction parameter has hit negative levels after some 20 years of sturdiness. This finding indicates that the public debt is likely to become unsustainable should no necessary measures are promptly implemented. Nevertheless, the Covid – 19 pandemic appears to be an unexpected and important source of an impediment for the government to achieve short-run stabilisation goals by skyrocketing social expenditures and transfers.