Abstract:

In the study, the reasons of the public internal and external debt in Turkey were examined for the period 2002-2019. The methods used in this study are the Distributed Autoregressive Model (ARDL) and the Error Correction Model (ECM). The results of the study shows that the variable that has the strongest effect on the public debt stock in both the short and long term is the current balance. Moreover, it was determined that there was a positive relationship between public domestic, fixed capital investment expenditures and the exchange rate. On the other hand, while the domestic interest rate negatively affects the public domestic debt stock, it has been determined that there is a positive relationship between public external debt, the budget deficit and the real effective exchange rate. In addition, it is concluded that the foreign interest rate and employment rate are not effective on public debt. Also, it is shown that the ECM mechanism works for both models.

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