Abstract:

Financing budget deficits arising from public expenditures exceeding public revenues can cause macroeconomic instability. The most significant of these is inflation. Instability, such as inflation and budget deficit, are among the important problems in front of the development of countries. This situation can be more effective, especially in underdeveloped or developing country economies. To eliminate such macroeconomic instability, it is essential to determine the main reasons. In this context, the study aims to determine the relationship between inflation and budget deficits in Turkey. In the research, the ARDL limit test was used to determine the relationship between inflation and budget deficits for 1994-2021 in Turkey. The findings concluded that the budget deficit, external debt burden and money supply have a statistically significant effect on inflation in the long run in Turkey. Accordingly, in Turkey, the budget deficit and external debt burden have an increasing effect on inflation, while the money supply has a decreasing effect.

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