Relationship Between National Income and Budget Balance in the Presence of Structural Breaks (Turkey Case)

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Pages: 74-81

Abstract:

The purpose of the study is to examine the relationship between public finance variables and structural breaks in national income. Quarterly data for the years 2006–2023 regarding national income, public revenues, public expenditures and budget balance variables of the Turkish economy were used in the study. The data were obtained from the TCMB Electronic Data Delivery System. The structural breaks in the series of variables were analyzed via Bai–Perron Multiple Structural Break Test. The analyses were made in the R programming language, RStudio program. Before performing the multiple structural break unit root test and Bai-Perron multiple structural break test developed by Bai–Perron (Bai, J., and Perron, P.; 2003), the series were tested for seasonality using the R seastest package. The results of the Bai–Perron test indicated that the breaks in the series coincided with the periods when important developments occurred in the Turkish economy. The breaks in the series, related to the variables, were found to be statistically significant.

Keywords:

national income; budget balance; budget deficit; structural break.

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