Sustainability analysis of fiscal policies applied in Turkey

Major changes have been observed in regard to the macroeconomic parameters in Turkey. In particular, financial liberalization process since 1980 and 1994, 2000 and 2001 crises have had an influential impact on financial discipline.In this study, the sustainability of fiscal policies implemented in Turkey has been tested. For the analysis, two different methods have been utilized; namely, the Bohn approach and the VAR analysis.The Bohn approach has been selected because of its effectiveness to provide healthy insights and results for developing countries. In addition, VAR analysis has been utilized since it has been a frequently used technique in recent years and it has been assessed as essential for the originality of the work.Many studies have been undertaken and are still in process in relation to sustainability of fiscal policies, both in Turkish and international contexts. In such respect, fiscal policies between 1980 and 2007 have been analyzed by the methodology mentioned above.To test the sustainability of fiscal policies, a comprehensive research has been carried out within the content of primary surplus and debt to GNP variables, which has proved out a case of sustainability. Whereas, for the analysis done on the basis of intervals, sustainability can?t be interpreted to be strong for the data during and after crises.When it is considered that the primary surplus based fiscal policies have been implemented in the process of transformation to the strong economy, the results of the research have been congruent with the foreseen results.