Abstract:

Ensuring fiscal disipline has became an important policy after 1994 in order to stabilize fiscal balances (budget balances, public debt) that deteriorated in Turkey after 1980. The interaction of applied fiscal dicipline policies with inflation has been examined in this study. The relationship between inflation and budget balance, primary balance and public debt stock has been examined by using the Todo-Yamamoto causality test, impulse-response analyzes based on the period of 1980-2016 annual data. According to emprical findings, while an increase in budget deficit causes inflation to rise, primary surplus leads to a decrease in inflation. An increase in public debt stock has a reducing effect on inflation in the short run.  

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