Budget Deficits Sustainability Of Selected Eu Countries And Turkey: Panel Cointegration Analysis

Budget Deficits Sustainability Of Selected Eu Countries And Turkey: Panel Cointegration Analysis

İsmet , Göçer

Sustainability of budget deficits is one of the most important macroeconomic problems in most countries. High public spending and insufficiency of public revenue are main reasons collapsing of Greek, Italy, Spain, Portugal and Ireland economies. For this reason, the conservation of budget balance and sustainability of budget deficits have a great importance. In this study; in selected 20 European Union countries and Turkey, the sustainability of budget deficit was analyzed with via under cross-section dependence panel co-integration analysis. At the end of the analysis; cross-section dependence was determined in these countries. Therefore, an economic shock which will come to one of these countries, affects the others, too. For this reason, the shocks that have been come to series don’t eliminate in the long term Co-integration relationship couldn't found between these series. Consequently, it has been seen budget deficits of these countries were unsustainable in the long term. Keywords: Budget Deficits, Sustainability, Cross-Section Dependence, Panel Co-integration Analysis. Jel Codes: C23, G18, H61, H62.

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PeerReviewed

2012-05-31

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