Triplets Deficits Hypothesis in Turkey: 2006-2018

Since the beginning of the 1980s, especially in the USA, a significance increment in budget deficits followed by the increasing current account deficits in the developed and developing countries has raised the question of whether there is a relationship between the budget deficit and the current account deficit. ''The Twin Deficits Hypothesis'' that suggests the existence of a relationship between the budget deficits and the current account deficit emerged during this period. Recently, based on the twin deficits hypothesis, the ''Triple Deficit Hypothesis'' which links the emergence of the budget deficit and the current account deficit to the private savings-investment deficits, is emphasized. If a private saving-investment gap is accompanied by a budget deficit and a current account deficit in a country, there is a triple deficit in that country. In this study, firstly, the budget balance, the current account balance and the private savings-investment balance are discussed theoretically. Then the development of triple deficit in Turkey between 2006:Q1-2018:Q1 period examined historically and it was focused on economic growth in that period. In the last chapter validity of triple deficit hypothesis was analyzed with econometric methods of ARDL (Augmented Redistributed Lag) in Turkey. In the analysis, a positive relationship was found between the long-term savings deficit and the current account deficit and policies to reduce savings gap may also reduce the current account deficit. According to the results of the analysis, triple deficit hypothesis was not confirmed for Turkey both for short and long term. Keywords: Budget Deficit, Current Account Deficit, Private Saving-Investment Deficit, Triple Deficit Hypothesis, ARDL