Discretionary fiscal policies and fiscal rule: The case of Turkey

From the past to the present, various schools of economics have put forward various views on the role of the state in the economy. Classical economic understanding, which prevailed until the economic crisis of 1929, limited the role of the state in the economic order to the fulfillment of basic public services and argued that the state should not interfere with the functioning of the economy. This view, which could not be a solution to the recession experienced with the Great Depression of 1929, was replaced by the Keynesian economic view. With the effect of this view, which gave broad powers to the political power in the intervention of the state to the economy and implemented fast and effective policies in times of crisis, the increasing public expenditures after the Second World War caused the countries to lose financial stability in the following years. The stagflation (inflation in recession) that emerged in the early 1970s and the cumulative increase in public debt stock in the following periods caused the questioning of the functioning of voluntary fiscal policies. From this point of view, approaches that advocate rule-based fiscal policies have been developed which cause political will to act within certain limits rather than as will when making decisions such as spending, income and borrowing. In the light of all this information, in this study, economic policy aims and tools, fiscal policy aims and tools have been discussed in theoretical terms, basic concepts and approaches related to voluntary and rule based fiscal policies have been examined. The problems experienced in the economies of countries that implement rule-based policies and how these solutions are provided are discussed. It has been demonstrated that fiscal rule practices or similar practices applied in order to ensure macroeconomic stability and fiscal discipline are applied in our country.