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The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy

Year 2008, Volume: 8 Issue: 8, - , 01.12.2008

Abstract

In public finance theory fiscal rules have been one of the main stabilization tools in obtaining budget balance and public finance balance. Many developed and developing countries have implemented specific fiscal policy rules so as to struggle with domestic distortions in economy. Balanced budget or deficit rules, borrowing rules and debt or reserve rules have been the most important rules that have been implemented in specific countries. A fiscal rule should ensure the solvency of the state, contribute to sustainability of fiscal policies by avoiding pro-cyclical behavior of the fiscal policy instruments and be simple and credible so as to be implemented effectively. In Turkish economy a specific form of a fiscal rule has been implemented since 2000 economic crisis. During 2000-07 period the Governments used a specific form of fiscal policy rule –non-interest budget surplus of 6,5 percent- so as to reduce instability. Although strict fiscal policies based on this target helped public finance balance to improve, they led private investments to decrease and unemployment rates to increase in the long run.

References

  • Bağımsız Sosyal Bilimciler (2002), Niyet Mektubu ve 2002 Başında Türkiye Ekonomisi” <http: //www.bagimsizsosyalbilimciler.org/iktisatg.htm>, 11.02.2004.
  • Bohn, Henning & Robert P. Inman (1996), “Balanced Budget Rules and Public Deficits: Evidence From the U.S. States”, NBER Working Paper Series, Nr. 5533, Cambridge, April.
  • Buchanan, James M. & Richard Wagner (1977), “A Return to Fiscal Principle”, Democracy in Deficit, Academic Pres, New York.
  • Buiter, William H. (2003), “Ten Commandments For A Fiscal Rule in The E(M)U”, Oxford Review Economic Policy, Volume 19, Issue 1, Spring.
  • Daban, Teresa & Enrica Detragıache & Gabriel Di Bella & Giad Maria Milesi & Steven Symansky (2003), “Rules Based Fiscal Policy in France, Germany, Italy and Spain”, IMF Occasional Paper, 225, Washington DC.
  • Esen, Oğuz (2002), “Türkiye’de Uygulanan IMF Destekli Yapısal Programlar”, Kriz ve IMF Politikaları, Ed. Ömer Faruk Çolak, Alkım Yayınevi, İstanbul.
  • Günay, Ayşe (2007), Mali Disiplinin Sağlanmasında Anayasal Denk Bütçe Yaklaşımı ve Türkiye’de Uygulanabilirliği, T.C. Maliye Bakanlığı Strateji Geliştirme Başkanlığı, Ankara.
  • Jacobs, Davina & Niek Schoeman, Jan Van Heerden (2002), “Alternative Definitions of the Budget Deficit and Its Impact on the Sustainability of Fiscal Policy in South Africa”, South African Journal of Economics, Volume 70, Issue 3.
  • Kennedy, Suzanne & Janine Robins (2001), “The Role of Fiscal Rules in Determining Fiscal Performance”, Department of Finance Working Paper, Canada.
  • Kızılot, Şükrü (2002), “Ekonomik Kriz ve Kamu Maliyesi”, Kriz ve IMF Politikaları, Ed. Ömer Faruk Çolak, Alkım Yayınevi, İstanbul.
  • Kopits, George & Steven Symansky (1998), Fiscal Policy Rules, Occasional Paper, 162, International Monetary Fund, Washington DC.
  • Manasse, Paolo (2007), “Deficit Limits and Fiscal Rules for Dummies”, IMF Staff Papers, Vol. 54, No. 3, International Monetary Fund.
  • Millar, Jonathan (1997), “The Effects of Budget Rules on Fiscal Performance and Macroeconomic Stabilization”, Bank Of Canada, Working Paper, 97–15, June.
  • Moğol, Tayfun (2000), “Mali Disiplini Sağlamaya Yönelik Bütçe Kuralları ve ABD Eyaletlerindeki Uygulamalar”, Anadolu Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, Cilt: 16, Sayı: 1–2.
  • Ongun, Tuba (2002), “Türkiye’de Cari Açıklar ve Ekonomik Krizler”, Kriz ve IMF Politikaları, Ed. Ömer Faruk Çolak, Alkım Yayınevi, İstanbul.
  • Republic of Turkey Ministry of Finance, General Directorate of Budget and Fiscal Control, <www.bumko.gov.tr>, 01.02.2008.
  • Republic of Turkey Ministry of Finance, General Directorate of Revenue Policies, <www.gep.gov.tr>, 01.02.2008.
  • Republic of Turkey Prime Ministry Undersecretariat of Treasury, <www.hazine.gov.tr>, 01.02.2008.
  • Sak, Güven (2000), “2000–2002 Yıllarında Türkiye Ekonomisi”, Panel, İktisat, İşletme ve Finans Dergisi, 15 (166).
  • Şimşek, Hayal Ayça (2004), “Evaluation of IMF Supported Programs in Turkey (1980–2005) : A Public Finance Perspective”, Journal For Studies On Turkey, No.17, Jahngang, Heft 1+2, Stiftung Zentrum Für Türkeistudien, Institut On Der Universitat Essen.
  • T.R. Prime Ministry State Planning Organization; <www.dpt.gov.tr>, 11.02.2008.
  • Tellier, Genevieve & Louis M. Imbeau (2004), Budget Deficits and Surpluses in the Canadian Provinces: A Pooled Analysis, Cahiers Du CAPP, Berlin, April.
  • Yeldan, Erinç (2001), “Türkiye’de IMF Destekli Enflasyonla Mücadele Programı”, Yeni Türkiye Dergisi, 7 (41).

The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy

Year 2008, Volume: 8 Issue: 8, - , 01.12.2008

Abstract

In public finance theory fiscal rules have been one of the main stabilization tools in obtaining budget balance and public finance balance. Many developed and developing countries have implemented specific fiscal policy rules so as to struggle with domestic distortions in economy. Balanced budget or deficit rules, borrowing rules and debt or reserve rules have been the most important rules that have been implemented in specific countries. A fiscal rule should ensure the solvency of the state, contribute to sustainability of fiscal policies by avoiding pro-cyclical behavior of the fiscal policy instruments and be simple and credible so as to be implemented effectively. In Turkish economy a specific form of a fiscal rule has been implemented since 2000 economic crisis. During 2000-07 period the Governments used a specific form of fiscal policy rule –non-interest budget surplus of 6,5 percent- so as to reduce instability. Although strict fiscal policies based on this target helped public finance balance to improve, they led private investments to decrease and unemployment rates to increase in the long run.

References

  • Bağımsız Sosyal Bilimciler (2002), Niyet Mektubu ve 2002 Başında Türkiye Ekonomisi” <http: //www.bagimsizsosyalbilimciler.org/iktisatg.htm>, 11.02.2004.
  • Bohn, Henning & Robert P. Inman (1996), “Balanced Budget Rules and Public Deficits: Evidence From the U.S. States”, NBER Working Paper Series, Nr. 5533, Cambridge, April.
  • Buchanan, James M. & Richard Wagner (1977), “A Return to Fiscal Principle”, Democracy in Deficit, Academic Pres, New York.
  • Buiter, William H. (2003), “Ten Commandments For A Fiscal Rule in The E(M)U”, Oxford Review Economic Policy, Volume 19, Issue 1, Spring.
  • Daban, Teresa & Enrica Detragıache & Gabriel Di Bella & Giad Maria Milesi & Steven Symansky (2003), “Rules Based Fiscal Policy in France, Germany, Italy and Spain”, IMF Occasional Paper, 225, Washington DC.
  • Esen, Oğuz (2002), “Türkiye’de Uygulanan IMF Destekli Yapısal Programlar”, Kriz ve IMF Politikaları, Ed. Ömer Faruk Çolak, Alkım Yayınevi, İstanbul.
  • Günay, Ayşe (2007), Mali Disiplinin Sağlanmasında Anayasal Denk Bütçe Yaklaşımı ve Türkiye’de Uygulanabilirliği, T.C. Maliye Bakanlığı Strateji Geliştirme Başkanlığı, Ankara.
  • Jacobs, Davina & Niek Schoeman, Jan Van Heerden (2002), “Alternative Definitions of the Budget Deficit and Its Impact on the Sustainability of Fiscal Policy in South Africa”, South African Journal of Economics, Volume 70, Issue 3.
  • Kennedy, Suzanne & Janine Robins (2001), “The Role of Fiscal Rules in Determining Fiscal Performance”, Department of Finance Working Paper, Canada.
  • Kızılot, Şükrü (2002), “Ekonomik Kriz ve Kamu Maliyesi”, Kriz ve IMF Politikaları, Ed. Ömer Faruk Çolak, Alkım Yayınevi, İstanbul.
  • Kopits, George & Steven Symansky (1998), Fiscal Policy Rules, Occasional Paper, 162, International Monetary Fund, Washington DC.
  • Manasse, Paolo (2007), “Deficit Limits and Fiscal Rules for Dummies”, IMF Staff Papers, Vol. 54, No. 3, International Monetary Fund.
  • Millar, Jonathan (1997), “The Effects of Budget Rules on Fiscal Performance and Macroeconomic Stabilization”, Bank Of Canada, Working Paper, 97–15, June.
  • Moğol, Tayfun (2000), “Mali Disiplini Sağlamaya Yönelik Bütçe Kuralları ve ABD Eyaletlerindeki Uygulamalar”, Anadolu Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, Cilt: 16, Sayı: 1–2.
  • Ongun, Tuba (2002), “Türkiye’de Cari Açıklar ve Ekonomik Krizler”, Kriz ve IMF Politikaları, Ed. Ömer Faruk Çolak, Alkım Yayınevi, İstanbul.
  • Republic of Turkey Ministry of Finance, General Directorate of Budget and Fiscal Control, <www.bumko.gov.tr>, 01.02.2008.
  • Republic of Turkey Ministry of Finance, General Directorate of Revenue Policies, <www.gep.gov.tr>, 01.02.2008.
  • Republic of Turkey Prime Ministry Undersecretariat of Treasury, <www.hazine.gov.tr>, 01.02.2008.
  • Sak, Güven (2000), “2000–2002 Yıllarında Türkiye Ekonomisi”, Panel, İktisat, İşletme ve Finans Dergisi, 15 (166).
  • Şimşek, Hayal Ayça (2004), “Evaluation of IMF Supported Programs in Turkey (1980–2005) : A Public Finance Perspective”, Journal For Studies On Turkey, No.17, Jahngang, Heft 1+2, Stiftung Zentrum Für Türkeistudien, Institut On Der Universitat Essen.
  • T.R. Prime Ministry State Planning Organization; <www.dpt.gov.tr>, 11.02.2008.
  • Tellier, Genevieve & Louis M. Imbeau (2004), Budget Deficits and Surpluses in the Canadian Provinces: A Pooled Analysis, Cahiers Du CAPP, Berlin, April.
  • Yeldan, Erinç (2001), “Türkiye’de IMF Destekli Enflasyonla Mücadele Programı”, Yeni Türkiye Dergisi, 7 (41).
There are 23 citations in total.

Details

Primary Language English
Journal Section Articles
Authors

Hayal Şimşek

Ayşe Bekâr

Publication Date December 1, 2008
Submission Date December 12, 2014
Published in Issue Year 2008 Volume: 8 Issue: 8

Cite

APA Şimşek, H., & Bekâr, A. (2008). The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy. Sosyoekonomi, 8(8). https://doi.org/10.17233/se.03961
AMA Şimşek H, Bekâr A. The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy. Sosyoekonomi. December 2008;8(8). doi:10.17233/se.03961
Chicago Şimşek, Hayal, and Ayşe Bekâr. “The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy”. Sosyoekonomi 8, no. 8 (December 2008). https://doi.org/10.17233/se.03961.
EndNote Şimşek H, Bekâr A (December 1, 2008) The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy. Sosyoekonomi 8 8
IEEE H. Şimşek and A. Bekâr, “The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy”, Sosyoekonomi, vol. 8, no. 8, 2008, doi: 10.17233/se.03961.
ISNAD Şimşek, Hayal - Bekâr, Ayşe. “The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy”. Sosyoekonomi 8/8 (December 2008). https://doi.org/10.17233/se.03961.
JAMA Şimşek H, Bekâr A. The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy. Sosyoekonomi. 2008;8. doi:10.17233/se.03961.
MLA Şimşek, Hayal and Ayşe Bekâr. “The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy”. Sosyoekonomi, vol. 8, no. 8, 2008, doi:10.17233/se.03961.
Vancouver Şimşek H, Bekâr A. The Effects of Fiscal Policy Rules on Fiscal Balance: The Perspectives on Turkish Economy. Sosyoekonomi. 2008;8(8).