Tax-Spend or Spend-Tax: An Ampirical Survey on Turkey

Article Information
Journal:Business and Economics Research Journal
Title of Article:Tax-Spend or Spend-Tax: An Ampirical Survey on Turkey
Author(s):Hasim Akca, Cevat Bilgin

In general, governments attempt to prepare balanced budgets. But countries’ specific economic conditions often lead to politicians to prepare budgets with deficits. However, if the economic policies can not be sustained, economic crisis become unavoidable. There is a causal relationship between tax revenues and increase in public expenditures. This relation could take the form of tax-spend or spend-tax, or both instruments could be synchronized. This study examines Turkey’s budget in respect to taxation and public expenditures. Examination of data for 1924-2009 suggests that it is better first to collect tax revenues and then plan the public spending program.

Keywords:Tax-spend, Spend-tax, Fiscal Synchronization, Cointegration

JEL Classification:C22, H69, H72 Full Text