Abstract:

Government expenditure is an important fiscal policy tool that has the potential to affect economic growth and unemployment. In this study, the effects of government expenditures on economic growth and unemployment were analyzed by time series analysis with structural break methods for the period of 1978-2020. Stationarity of the series was investigated by Carrion-i-Silvestre et al. (2009) unit root test, cointegration relations were by Maki (2012) test, long and short term analyzes were conducted with the FMOLS, DOLS, and CCR. In the long term; it was determined that a 1% increase in government expenditures increases national income by 0,44% on average, causes an increase in unemployment rate and a 1% increase in fixed capital stock increases national income by 0,39% on average while an increase in the share of government expenditures in national income raises unemployment rate. In the short term; It was determined that government expenditures and fixed capital stock still increase national income. Government expenditures increase unemployment in the short run, and increases in national income decrease unemployment in the short run. The causality relationships were examined by using the ECM method. In the short run, causality relationships from government expenditures and labor to national income, from economic growth to unemployment were determined. In the long run; it was observed that there are causality relationships from public expenditures, national income, the share of government expenditures in national income, economic growth, and interest rates to unemployment.

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