Abstract:

The main purpose of this study is to identify the main variables affecting Turkiye’s external debt. The stationarity levels of the variables were tested using Augmented Dick Fuller (ADF) and Phillips Perron (PP) unit root tests. On the other hand, the long-term relationship between exchange rate, domestic savings, trade openness rate and national income earnings and external debt stock variables was examined by Autoregressive Distributed Lag Model (ARDL) and Error Correction Model (ECM) tests. According to the findings of the study, the coefficient of domestic savings and national income earnings is positive and significant at the 5% level of significance. Other factors being constant, the 1% increase in domestic savings will increase the external pipe in Turkiye by 0.113% in the long run. On the other hand, a 1% increase in national income earnings will cause an increase of 0.772% on foreign debt in Turkiye in the long run. In addition, the coefficient of the exchange rate is negative and significant at the 5% level of significance. Other factors being constant, the 1% increase in the exchange rate will reduce the foreign debt in Turkiye by 0.422% in the long run. However, according to the estimation results, there was no statistically significant result of the change in the trade openness ratio on foreign borrowing. The sign of the coefficient of the predicted trade openness variable is negative. As a result, it has been determined that external debt is mostly triggered by the level of domestic savings.

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