Özet:

The aim of this study is to reveal the relationship between public expenditures and public revenues of upper-middle income countries such as Turkey by empirical analysis. Determining the relationship between public expenditures and public revenues of countries such as Turkey that remain at the upper-middle income level is important.Unlike other studies in the literature, the study examined the issue specifically in countries that have remained at the upper-middle income level. In this way, data will be obtained for policy makers of countries aiming to reach the high income group on their efforts to raise income levels and maintain the income-expense balance. The study encompasses cross-sectional dependence, homogeneity, unit root, cointegration, and causality analyses, utilizing annual data spanning the years 1990 to 2021 for ten countries classified within the upper-middle-income category. The findings indicate the presence of a cointegration relationship between public expenditures and public revenues. Furthermore, it is observed that the institutional separation hypothesis, positing the absence of causality, and the expenditure-tax hypotheses, which argue that expenditures contribute to income growth, are predominantly valid. When evaluated within the context of Turkey, it is concluded that the expenditure-tax hypothesis is valid.

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