THE RELATIONSHIP BETWEEN INFLATION, ECONOMIC GROWTH AND BUDGET DEFICIT IN TÜRKİYE

Authors : Merve Esra Gülcemal

Pages : 91-102

Doi:10.58627/dpuiibf.1545070

View : 57 | Download : 77

Publication Date : 2024-12-31

Article Type : Research Paper

Abstract :Like in the past, inflation remains one of the most significant concepts affecting the welfare levels of countries today. Especially during economic crises, the price instability and high inflation rates experienced have compelled countries to work in this area. The characteristics of variables related to inflation have been studied, and many theories have emerged. Just as there are many macroeconomic factors affecting inflation, there are also macroeconomic components affected by inflation. It is crucial to determine the direction of the relationship between economic variables, as there can be both one-way and two-way relationships among these components. Policymakers aim to keep inflation levels as low as possible by shaping their policies according to these relationships. This way, countries strive to achieve minimal inflation, fostering economic growth and maintaining budget balance. Examining the relationship between inflation, economic growth, and budget deficits is essential not only for price stability but also for reducing external dependency and positively influencing growth. This study utilizes annual inflation, budget deficit, and economic growth data for Turkey from 1990 to 2022 to analyze the relationships among these variables using econometric methods. In accordance to the results of the causality analysis, a unidirectional causality from growth to inflation and from inflation to budget deficit has been identified. This suggests that growth triggers inflation, and inflation, in turn, triggers budget deficits.
Keywords : Enflasyon, Ekonomik Büyüme, Bütçe Açığı