An analysis of the framework peacock-wiseman displacement thesis on the change of public expenditure in turkey

There are many studies in the literature to explain the increase in public expenditures. In this context, the displacement thesis has been tested on various country economies to cover different time periods. In some of these studies, findings supporting the displacement thesis were reached, while in others, it was concluded that the displacement thesis was not valid. In this study, it is aimed to determine the validity of the Peacock and Wiseman displacement thesis in Turkey between 1924 and 2020. In this context, public expenditures, tax revenues and gross domestic product data of the relevant period were used. In accordance with the purpose of the study, the variables were first analyzed with Kapetanios (2005) multiple structural break unit root test. As a result of the Kapetanios test, five structural break dates for each variable were determined. When these dates are evaluated considering the conditions of the period, it has been determined that they coincide with extraordinary periods. The variables were then analyzed by Hacker and Hatemi-J (2006) and Hatemi-J (2012) causality tests. As a result of causality tests, findings supporting the Kapetanios test were obtained. In this context, it has been concluded that the Peacock and Wiseman displacement thesis is valid for the period 1924-2020 in Turkey.