Factors determining current account deficit in turkey and role of alternative energy sources in current account deficit reduction

Energy is indispensable for the production sector for all economies. The importance of energy, which is the focus of global competition, is increasing day by day in proportion to increasing energy demand. Analyses about the reasons of the current account deficit and the policies to reduce it have been hot topics in economics literature. Even though there are a lot of factors affecting current account deficit, being dependant on outer energy resources is one of the most significant factors. As it is in the whole world, in Turkey there is a tendency towards renewable energy sources in order to meet the increasing energy demand. In this research, the determiners of the current account deficit which is the most important problem of developing countries are examined. VAR Model is constructed using the annual data between 1980 and 2015 including the current account deficit, the gross domestic product, real effective exchange rate, petroleum prices and the rate of electricity production from the renewable energy resources to the total electricity production. Although nuclear energy can be an alternative energy resource similar to the renewable energy resources, it is not included in the constructed VAR model because there is no historical data for our country. Johansen Cointegration Test and Granger Causality Test are applied in the constructed model. As a result of the carried analysis, it is concluded that the gross domestic product and real effective exchange rate constitute the current account deficite's granger reason. Key Words: Current Account Deficit, Balance of Payments, Renewable Energy Sources, Nuclear Energy, VAR Model, Cointegration.