An Asymmetric Investigation for the Validity of Triple Deficit Hypothesis in Turkey

Ahmet Ekrem Kaya, Mesut Karakaş, Ozan Bora Gür, Hüseyin Alperen Özer

Abstract


In this study, we investigate the asymmetric relationship between budget balance, financial account balance and current account balance. Using quarterly data 1998:Q1-2016:Q4 and applying NARDL (Nonlinear Autoregressive Distributed Lag) method, we find that there is a causality relationship stemming from budget and financial account balance to current account balance. Moreover, we determine a causality relationship from budget balance and current account balance to financial account balance. Our findings are also supported by the existence of long run asymmetry. The results of our study presents evidence for the validity and asymmetric dynamics of triple deficit hypothesis in Turkey.


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