Domestic borrowing's inflationary effects and there is a study between domestic borrowing and inflation in Turkey

The aim of this study is to study whether or not there is a causalrelationship between domestic borrowing and its inflationary effects, andbetween domestic borrowing and inflation in Turkey.The gap between government income and government expenditureis named as goverment deficit. Government can finance the deficit bytaxation. There are three methods that goverment might use if thegovernment to avoid taxation. These methods are domestic borrowing,external borrowing and monetization, in other words, printing money.In Turkey, domestic borrowing, not often, was applied from 1930suntil mid 1970s; yet foreign borrowing has become an essential part of ourfinance since the 1980s. Financing needs that have grown particularly since1985 have also caused the needs of running into domestic debt to grow. Thisfact led to the result of state bonds? emission in shorter terms and higherinterest rates, and rising of interest rate caused amounts paid back of capitaland interest of the goverment to multiply. Because debts received were notpaid back from the state?s basic revenues, running into domestic debt wasrealized to pay back interest of debts that had been received. This factcaused running into debt to be realized continuously.In this work monthly these results have been found when GrangerCausality Test are applied by utilizing domestic borrowing stock and theindex of the white goods. In Turkey domestic borrowing is a componentcreating inflation. Also the inflation is a component increasing the necessityof domestic borrowing.As a result, it doesn?t seem possible to give up immediately policiesimplemented in our country. In this term, it is imperative that methods ofrunning into domestic debts be changed. That is, running into domestic debtsin shorter term ought to be realized for only compensating for any differencebetween revenue and expenditure that happened in a given year.Nevertheless, running into domestic debt in longer terms should be realizedto finance investment, which will make money in the future. Thus, there willbe no need run into domestic debt in order to pay back those which havebeen received before.