The impact of internal borrowing post 1980 period on Turkish economy

Internal National Debts is a kind of public loan, which is obtained from internal resources in order to fund the budgeted public services in a way that the total resources of a country do not increase or decrease in case of the loan being borrowed or paid back. National debts have three main folds, namely, freedom of borrowing, terms of payments, and sources of funding. However, the management of these debts can be classified as ordinary and extra ordinary. The national internal and external debts have some effects on national economy. In this respect, this study aims to examine the effects of national debts on economic stability, economic growth, economic development and income distribution between the period of 1980 and 2006.The results of the study show that both the national debts of Turkey and the corresponding interest payments increased according to both nominal and real indexes. The rises in national debts have also affected some macro economic indicators. In parallel with the increases national debts of Turkey, the national current expenditures have been increased. Domestic loans have stimulated the inflationist effects and the main the factor of this stimulation is the rise in monetary supply that is caused by domestic loans.In the scope of the study, the effects of national debts on economy have been taken into conderation together with the changes on investments. The results show that high interest rate of domestic loans has a reducing effect on private investments. Finally, analyses for investigating the effect of domestic loans on the distribution level of show that domestic loans cause disequilibrum and instability on income levels.