Examination of the public debt problem and the concept of financial dominance in the framework of Post Keynesian approach

The reflections on the public debt problem, which has become the main problem of the Turkish economy, had left a negative effect. Plenty of economic problems such as private and public debt, exclusion effect, public debt stock problem, and high real interest are being experienced. Especially, after the financial crisis in 2001, whether the debt stock is sustainable or not has created further controversies. In Turkey, by using the data between the years 1980-2020, economic problems were thoroughly examined, and suggestions were made. In the second part of the study, the concept of public debt management is the main title and theoretical approaches to public borrowing, public debt stock, and Turkey's internal and external borrowing processes are included in the content. The monetary policy strategy of the Modern Central Banking era is mentioned in detail. The third part includes the methodology of Post Keynesian macroeconomics. Its content includes the main features, the differences with the orthodoxes, monetary policy views, objectives, and approaches. In the fourth part, information about the major and fundamental problem of Turkey's financial dominance and exclusion effect is given. What is aimed to explain in this part is the fact that there is no exclusion effect. According to Post Keynesian Economics public deficits do not form an exclusion effect and increase private sector profitability. In the last part, for econometric analysis, the study has been done by using quarterly data with reviewing the period of Turkey 2010Q1- 2022Q2. The causality test had been made on 3 different models by using the variables of public net debt stock, budget deficit, private sector fixed capital investments, and loan interest rates. For the first model Granger Causality Test, and for the second and third ones, Toda Yamamoto Casualty Test had been used. As a result of this analysis, it is seen that the investments being responsive to the interest, and public expenditure does not create an exclusion effect. Detailed information is given in the study.