The economic effects of fiscal deficits and recommendation

Fiscal deficits play an important role in evaluations of the country economies. Such fiscal deficits and the financial policy tools used in financing these deficits might have discrete structures. On the other hand, the effects of these money and financial policy tools on macro economy variables might have discrepancies. This issue has an outstanding place in arguments among the economic conception schools.In this study, the evaluations of the effects of expanding and rigid financial policy applications pertaining to the fiscal deficits on the macro-variables and sectoral values will be argued for Turkish economy. For this reason, ?Computable General Equilibrium Models? which setup an analytic basis for considering the effect of macro variables and external shocks on the economy and, at the same time, which evaluate the economic system in terms of rule-based political applications in a general balance basis are made used of. This General Equilibrium Model created for Turkish economy is specialized as a static real sector model.As a result of fiscal policy scenario applications pertaining to the fiscal deficits, we face with a betterment among the development, prosperity, foreign trade and primary public equilibrium values as a matter of preference. Public deficits and foreign trade deficits are the two major imbalances Turkish economy is confronted with. It is estimated to experience serious problems in macro economical and sectoral sense as long as Turkish economy has these two major deficits.