Triplet deficit hypothesis and analysis of the effects of fiscal policy in Turkey

In order to avoid problems in the country's economy, macroeconomic equilibrium is the most important issue. When external economic equilibrium and domestic economic equilibrium are equal to each other, macroeconomic balance is ensured. The external economic equilibrium is composed of the current account balance and the internal economic equilibrium is combined with budget balance and private saving-investment balance. For this reason, the current account deficit is expected to be as much as the sum total of the budget deficit and the private saving deficit and the deficit at the same time of these three variables is expressed as "triple deficit". The triple open hypothesis emerged with the addition of a savings-investment deficit to the twin deficit hypothesis, which is a combination of budget deficit and current account deficit. When the economies of the country were examined in recent years, it was seen that these three equilibrium elements were affected by each other in some countries and this subject started to be examined in the theoretical and empirical studies. In this study, for examining the interaction of fiscal policy in Turkey and triplet deficit components, triplet deficit hypothesis has been tested for Turkey's economy. Firstly, the components of the triplet deficit hypothesis have been investigated theoretically and the emergence of the triple open hypothesis has been explained. In the second part, financial and economic policies implemented in Turkey were examined financial and economic policies implemented in Turkey were examined since its foundation until today and the change in triplet deficit components have been examined. In the last chapter, triplet deficit hypothesis has been tested with VAR method for Turkey's economy with using 1975-2016 annual data. Empirical evidence results showed that the triplets deficit hypothesis is not valid for Turkey's economy.