The interaction of current account balance and growth in the Turkish economy (Time series analysis)

In Turkey and many developing countries such as Turkey, in recent years, the relationship between current balance and economic growth in the economic literature has been the subject of study by many researchers. The main reason why this issue is so important is that Turkey and developing countries such as Turkey want to increase their export rates by paying attention to economic growth, but it is investigated whether the supply of raw materials and the products needed for production while exporting through imports has a negative effect on the current balance. In some of the analyses and researches, it was tried to answer the interactions of current balance and growth variables with each other and in which direction the interactions were. Similarly, other studies for current account deficits have analyzed the sustainability of the current account deficit extensively by researchers, but no definitive conclusions have been reached. Some countries with high current account deficits have a "sustainable current account deficit", while some countries with low current account deficits have "unsustainable current account deficit" results. In this study, VAR analysis and Granger causality test were applied for the periods 1998Q1-2021Q2 using time series analysis to explain the relationship between current account deficit and national income for Turkey. According to the results obtained, there is a one-way causality relationship from the current account deficit to the national income. As a result, according to our analysis results, Turkey's economy can achieve growth by running a current account deficit.