The maturity structure of domestic borrowing in Turkey and the emprical analysis of its effect on debt management

Over the last few years, optimal fiscal and monetary policy models that include theories of debt management have been encountered frequently in the literature. The maturity of public debt appears to be an essential variable in these theories. In the meantime, in almost all financial crises, including the 2007-2008 Global Financial Crisis, the debt-to-maturity structure has become a key variable and the necessity for the more frequent inclusion of maturity structure in the analysis of debt sustainability has arisen. The aim of this study that analyzes Turkey's domestic debt dynamics and debt management process empirically in the context of the maturity structure in the period of 1990-2018, is to evaluate the findings within the framework of relevant theoretical approaches to the maturity structure and economic conditions of the period. The differentiation of the trend in the maturity structure of domestic debt in Turkey for the subjected period indicates that the economy has different terms within the domestic borrowing process. In order to demonstrate the impact of this distinction on domestic debt dynamics and debt management process comprehensively, the Markov Regime Switching Vector Autoregression (MS-VAR) Analysis has been implemented. The study concludes that the differentiation of the maturity structure by periods is due to a regime change. Accordingly, the period between 1990-2018 have two different regime structures and the effect of the maturity structure on the domestic borrowing dynamics is different in each regime period. Key Words Maturity Structure, Debt Management, Domestic Debt, Markov Regime Switching Vector Autoregression