Abstract:

Borrowing is oneof the applied waysto supply thefinancing needs of the state. The state provides borrowing from its sources such as supplies foreign sources. In particular, after the middle of the 1980s it is remarkable that mainly it is resorted to sources of the country for the financing of public deficits in the Turkish economy. However, theform of the borrowingaffectssome macroeconomic variables. The aim of this study is to investigate the possible relationship between domestic borrowing/The Gross Domestic Product and inflation rate with modern time series analysis for the period of 1998-2012 in Turkey.In this study,unit root tests,Johansenco-integration, error correction methods are used. As a result, it is found that there is a long-term relationship between domestic borrowing / GDP and inflation rate in Turkey.

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