The relationship between the current account deficit and budget deficit: 1950-2012 period an appli̇cati̇on i̇n Turkey

The relationship between the current account deficit and budget deficit is examined in this study. In first section, current accounts are discussed, factors affecting the current accounts balance and approaches explaining the current accounts balance and current account balance with in balance and unbalance are explained. In second section, the budget balance and unbalance are discussed, then the reasons of budget deficit, theoretical approaches appertaining to budget deficit with current accounts deficit and budget deficit relationship are explained with theoretical approaches. In third section, for Turkey's economy with annual datas in 1950-2012 and causality relationship between current accounts deficit and budget deficit with cointegration analysis and Granger causality tests are explained. Results of the analysis 1950-2012 period showed that there is a long-run relationship between the budget deficit with the current account deficit. With the aim of determining the direction of relation, according to causality test results, from budget deficit to current accounts deficit in the same time from currents accounts deficit to budget deficit are found two-way causality relationships.