Selected macroeconomic indicators of the impact of defense spending in Turkey (1960-2017)

Since the early ages of history, states have worked to ensure the survival of their country and to leave a more developed and safe country to the future generations both economically and socially. While there is no ratio that cannot be separated from the budget while the permanence of the country is in question, the state budget does not consist of unlimited resources also. States should allocate these limited resources at an optimal level that will increase the economic welfare of the country and not make the state vulnerable to internal and external threats. This need requires consideration of the effects of macroeconomic indicators in the allocation of limited resources from the budget. For this purpose, the growth of defense spending in Turkey, inflation and current account deficit were analyzed by ARDL bounds testing for effects on the balance period 1960-2017. According to the results of the analysis, a 1% increase in defense expenditures in the current period increased growth by 0.071, while this ratio decreased by 0.072 in the first lag period of defense expenditures and the results are statistically significant. a 1% increase in defense spending has an effect of increasing inflation by 1.29%. There is a negative relationship between the current account balance and defense expenditures both in the delayed period and in the current period. However, this inverse relationship is not statistically significant.