Abstract:

The main objective of this study is to identify the impact of changes in the budget balance on economic growth. The situation in Turkey and Germany has been examined. These countries are divided in indirect tax and indirect tax preferences. The short-term and long-term effects of the two countries have been discussed and the differences have been identified. In the framework of the study, economic findings have been achieved using the Otoregressive Distributed Delay (ARDL) model through data covering the period 1995-2016 for both countries. This is the result of the economic data obtained from the two countries. The impact of the budget balance on economic growth is similar for both countries in the long term. However, there are significant differences in the short term relationship.