Interaction of Economic Growth with Tax Revenue and Budget Expenditures in Turkey

Abstract

In this study, the relationship between tax revenues and budget expenditures and economic growth in Turkey was investigated in the period of 1961-2017. For this purpose, an empirical analysis was performed by using the Hatemi -J (2012) asymmetric causality test. According to the test results, a two-way causal relationship was determined between budget expenditures and economic growth in terms of positive source shocks, but no causal relationship was found between the variables in terms of negative shocks. When the relationship between tax revenues and economic growth is analyzed, it is determined that there is a oneway causal relationship from economic growth to tax revenues in terms of positive shocks. However, no causal relationship is observed among variables in terms of negative shocks.