Fiscal dominance and the interaction analysis of demographic elements in fiscal dominance: BRICT countries

The main duty of the state is to meet the needs of individuals in the society. While the state meets the needs of the society, it first determines the needs of the individuals and makes plans by making use of the resources at their disposal effectively and efficiently. While making these expenditures, it aims not only to meet the individual needs of individuals, but also to develop the society as a whole, to raise the level of social welfare and to ensure its economic development. The state allocates its resources to health, defense, education and social security while performing its economic duties. The fact that the increase in public expenditures is higher than the increase in GDP causes fiscal dominance. The concept of fiscal dominance is important as it is one of the important indicators of a country's economic performance. In the study, BRICT countries with similar characteristics in terms of population, geographical area, market size and economic growth rates; the current account deficit, external debt stock, GDP growth rate, education expenditures made by the government, military expenditures and health expenditures were analyzed with Panel VAR analysis to determine their effects on fiscal dominance. As a result of the panel causality test of Dumitrescu Hurlin, which is conducted with the annual data obtained from the World Bank Economic Indicators Database for the period 2000-2017; It is found that there is a one-way causality relationship between the ratio of health expenditures to GDP and the education expenditures made by the state to GDP, from the ratio of health expenditures to GDP to the ratio of military expenditures to GDP. However, in the short and long term, it was determined that there was a military expenditure which had the most effect except for itself in explaining a change in fiscal dominance. Military expenditures are followed by external debts, GDP growth rate, education expenditures made by the government and health expenditures.