The Effect of Budget Balance on Government Bond Rates: The case of Turkey

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JOEEP: Journal of Emerging Economies and Policy
Volume:8 Issue:2
The Effect of Budget Balance on Government Bond Rates: The case of Turkey

The Effect of Budget Balance on Government Bond Rates: The case of Turkey

Authors : Halit Yalçin

Pages : 498-507

View : 104 | Download : 107

Publication Date : 2023-12-30

Article Type : Research Paper

Abstract :If public expenses cannot be covered by revenues, budget deficits occur. It is not preferred to close the budget deficit by increasing taxes or reducing expenditures. In this case, borrowing becomes necessary to close the deficit. Public sector borrowing affects the prices of government debt securities and therefore interest rates. In this context, in the study, the relationship between the budget balance to GDP ratio and 2-year bond interest rates in the Turkish economy was investigated. Quarterly data were analyzed with the ARDL method for the period 2006Q1:2023Q2. As a result, it has been determined that the ratio of budget balance to GDP is related to 2-year bond interest rates in the long term.
Keywords : Bütçe Dengesi, ARDL Sınır Testi, Tahvil Faiz Oranı

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