Özet:

The relationship between the budget balance and the current account balance is a matter of debate for many years. While the Traditional Keynesian Approach recognizes that there is a relationship between the two deficits, the Ricardian Equivalence Hypothesis rejects this view. Turkey's economy has been observed in chronic current account deficit and budget deficits for many years. The main aim of this study was to test whether the twin deficits hypothesis is valid in Turkey's economy and to determine the direction of the causality relationship between the budget deficit and the current account deficit. In the study, data were employed on an annual basis in the period 1975-2015 and time series analysis was preferred. The direction of the causality between the budget deficit and the current deficit was examined using the Toda and Yamamoto (1995) causality test and bi-directional causality relationship was determined between the variables.

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