Current account balance and economic growth relationship in Turkey in the post-1980 period: An empirical application

Since the 1980s, the current account deficit has become one of the most important macroeconomic problems in the Turkish economy. Increases in current account deficits in developing countries such as Turkey may have a negative impact on economic growth. In this study, which explains the relationship between current account balance and economic growth in the post-1980 period, firstly the concepts of current account balance and economic growth are included. Then, the development of the current account deficit problem in the world and in Turkey, and the development of economic growth in Turkey are discussed. In the last part, namely in the analysis part, the budget balance was added as a new variable and the econometric analysis between the current account balance, economic growth and the budget balance was included. In the study, the relationship between current account balance, economic growth and budget balance was analyzed for the period of 1981-2021. The time series data of the variables were tested with the ADF unit root test and it was concluded that all three variables were stationary when the first difference was taken. Then, whether there is a cointegration relationship between economic growth, budget balance and current account balance was analyzed with Johansen cointegration and it was concluded that current account balance, economic growth and budget balance do not act together in the long run. Finally, Toda-Yamamoto causality test was performed to analyze whether there is a causal relationship between the variables. As a result of the analysis, it was found that there is bidirectional causality between economic growth and current account balance, and bidirectional causality between budget balance and economic growth.