Kamu Kesimi Etkinliğinin Bütçe Dengesi Üzerindeki Etkisine İlişkin Ampirik Bir Değerlendirme

Abstract

Even though budget deficits have been one of the most important indicators of fiscal performance for past years, it has been neglected and replaced by macroeconomics indicators such as economic growth, inflation, interest and exchange rates. As time goes on, crisis made budget balance essential again and budget deficits resulted from expansionary fiscal policies has been considered as a way of getting rid of crisis. Therefore, both theory and practice works related to budget deficits start paying attention, and it has been one of the indicators that countries put on forefront again. Particularly, since there is a close relationship between budget deficits and public spending, governments refer to budget management and its implementation in their policies more than ever. The main reason of budget deficits is public spending because of increasing them. Thus, it is crucial to understand the linkage between budget deficits and public spendings. In times of crisis, especially after 2008 global financial crisis, expansionary fiscal policies had been a significant phase of economic policy of governments and have been adopted by many countries to restore economies. In order to make it happen, governments have raised public spendings. This policy leads to inevitable budget deficits, affecting fiscal performance negatively. Therefore, debates about the qualitative of public spendings, in other words efficiency, has attracked attention recently in addition to knowing that public spendings increase budget deficits quantitatively. In that point, it has been started questioning whether governments spend really public spendings on necessary places or not and efficiency has a positive impact on budget balance in case of efficiency is carried out. The main aim of this paper is to investigate effects on budget balance of both government size and the efficiency of public sector. In this thesis, we have empirically explored the efficiency of public spending and the influence on the budget balance of efficient public spendings via different indicators. It is made choice between fixed and random effects models which are two of alternative models according to Hausman test statistics and prefered fixed effects model methodologically in thesis. However, we have employed generalized moments method (GMM) used common in literature to interpret empirical results better and due to being needed comprehensive and analytics method. Empirical results show that the increase in the size of public sector causes budget deficits. As population also grows with economic growth, the budget balance is affected positively. On the other hand, an increase in public investment brings on budget deficits. Contrary to common belief, the rise in public debt makes a positive impact on budget balance, as well. Even though these results are not in line with expectations, it is possible to emphasize that fiscal stance and balance can be healed provided that public debt is directed to efficient spending areas which achieve economic growth. The findings related to effects of explanatory variables answer the main question of thesis. Obviously, there is an increasing effect of public spendings on budget deficits. At the same time, making efficiency in public sector reduces the burden of budget statistically and significantly.