Impact of Public Expenditures and Economic Classification on Growth: Turkey Analysis

Ersin YAVUZ, Eren ERGEN

Özet


The aim of the study is to examine empirically the effects of public expenditure and economic classification which are current, investment and transfer spending on economic growth. The VAR method and the regression method are tested with data covering the years 1975-2014. According to the findings, a shock occuring in total public expenditures affects negatively economic growth up to a turn. When economic classification of public expenditures is analyzed, it is established that a shock occuring in transfer expenditures affects negatively economic growth up to two turns. Current expenditures affect the first and third period negatively and the effect of investment expenditures can not be interpreted statistically. According to regression analysis, a 1% increase in total public expenditure affects negatively economic growth by 0.85%. Moreover, a 1% increase in transfer expenditures within the economic classification has a negative effect of 1.28% on economic growth. The findings show that public spending in Turkey is not effective in the corresponding period.

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