Spatial analysis of fiscal convergence between cities and regions in Turkey

The main concern of policy makers in recent years has focused on attempting to bring different regions or countries to a similar level of economic development. For this reason, research is based on the evaluation of convergence policies based not only on per capita income but also on other variables. Convergence, which is generally thought to be a result of neoclassical growth theory, is actually a central issue around which the growth literature has developed. In this thesis, the existence of convergence between income convergence and regional fiscal policies in Turkey has been investigated within the framework of the Solow Growth Model. Based on the model, it seems a reasonable hypothesis to assume that tax revenues and public expenditures will also converge when there is income convergence between economies. In addition, since there is spatial dependence in traditional income growth models, it is thought that the growth in local fiscal policy is also spatially related between provinces. For this reason, the effect of spatial interaction on convergence was revealed by analyzing the fiscal policies implemented on a provincial basis with panel data model and spatial panel data models (SAR, SEM, SAC, SDM). According to non-spatial models, per capita income, tax and public expenditure variables show conditional convergence on the basis of 81 provinces for the period 2006-2020. Absolute convergence was found only in per capita income and tax income. The results of the spatial panel models, on the other hand, show that there is only spatial interaction for the per capita income and public expenditure variables in the period. The effects of public expenditures and taxes on convergence and growth are also examined with the help of both spatial and non-spatial models. It has been determined that both variables contributed to growth and convergence in the period.