Budget deficit and its finance: An Evaluation on The Türki̇ye economy

Public expenditures and public revenue sources used to finance these expenditures are included as estimates in public budgets. The change in the state's share in the economy affects the budget and budget deficits. Accordingly, alternative financing methods of budget deficits are also becoming important. The budget deficit has an impact on various macroeconomic factors. This thesis aims to analyze the effects of economic growth, exchange rate, unemployment and interest rate variables, which are empirically tested in the literature, on budget deficits, specifically for Turkey. The analyses were conducted using annual data obtained from the Strategy and Budget Presidency, the World Bank database, and the Ministry of Treasury and Finance between 1991-2022. According to the findings, there is a long-term relationship between budget deficits and macroeconomic variables. Inflation and unemployment variables were found to be Granger causes of the budget deficit. These findings indicate to policy makers that inflation and the factors that make inflation permanent should be evaluated together, at least in terms of sustainability of budget deficits.