Abstract:

This paper intends to empirically analyze the availability of quadruplet deficit hypothesis for Turkish economy. The preferred methods are bound test, ARDL model estimations and Toda-Yamamoto causality test. Analyzes were achieved with quarterly data of 2006:1-2022:1 period. Empirical findings demonstrate that the variables are cointegrated. The long-run coefficients of ARDL models, put forth that budget deficit has positive and output gap has negative effects on current account deficit. The long term influence of saving investment deficit on current account deficit is found to be insignificant while its short term effect is significantly positive. Additionally, it is detected that budget deficit and saving investment gap has positive, current account deficit has negative impact on output gap. It has been observed that the saving-investment gap affects the output gap positively also in the short run. According to the evidences from causality test; output gap shows a statistically significant bidirectional causal relationship with budget deficit, current account deficit and saving-investment gap variables. In addition, it has been determined that current account deficit has a bidirectional causal interaction with budget deficit and saving-investment gap variables. The way of unidirectional causal impact between budget deficit and saving-investment gap is toward to budget deficit variable.

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