Determinants of current account deficit in Turkey: Multivariate time series analysis application

Current account deficit which is one of the most significant indicators of macroeconomic performances of countries and shown as one of the main reasons of economic crises, has constituted a chronical problem for Turkish economy for a long time. In this study, by means of using the data obtained from Turkish economy during 1995:Q1-2017:Q4 period; with the help of Granger Causality Analysis, Impulse-Response and Variance Decomposition Analysis carried out within the scope of VAR Analysis; Real Growth, Real Effective Exchange Rate, Oil Prices, Portfolio Investments, and Overseas Real Growth variables' effects on Current Account Deficit were investigated. Overseas Growth variable used in this study was constituted by means of using the GDP values of the countries having important places in foreign trade and significant foreign trade partners of Turkey. Also, during the analyses, after the examination of stationarity made by means of both traditional and structural break methods; VAR Model was created via' variables free from structural break. As a result of this study, for Turkish economy which current deficits realizations are observed for many years; Portfolio Investments, Economic Growth, Oil Prices, and Overseas Growth were detected as variables of current account deficits during 1994-2017 periods.