{"title":"Analysing the Armey curve based on the Fourier cointegration approach for Turkey","authors":"Süleyman Kasal","doi":"10.2298/eka2336139k","DOIUrl":null,"url":null,"abstract":"One major theoretical and empirical issue that has dominated fiscal policy for many years concerns the optimal size of government. Armey (1995) believes that the relationship between government expenditure and economic growth is an inverted U-shape, arguing that there is an optimal point where government expenditures maximise economic growth. The primary objective of this study is to investigate the validity of the Armey curve for Turkey in the period 1998:Q1-2020:Q4 using the Fourier cointegration method. The study has found that the Armey curve is valid for Turkey. The evidence indicates that the optimal size of government in Turkey is equal to approximately 18.5% of GDP. This paper highlights that the notion that government expenditure increases economic growth should not be seen as the only policy option. A key policy priority should therefore be to design fiscal policies that take into account this non-linear relationship.","PeriodicalId":35023,"journal":{"name":"Economic Annals","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economic Annals","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2298/eka2336139k","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"Economics, Econometrics and Finance","Score":null,"Total":0}
引用次数: 0
Abstract
One major theoretical and empirical issue that has dominated fiscal policy for many years concerns the optimal size of government. Armey (1995) believes that the relationship between government expenditure and economic growth is an inverted U-shape, arguing that there is an optimal point where government expenditures maximise economic growth. The primary objective of this study is to investigate the validity of the Armey curve for Turkey in the period 1998:Q1-2020:Q4 using the Fourier cointegration method. The study has found that the Armey curve is valid for Turkey. The evidence indicates that the optimal size of government in Turkey is equal to approximately 18.5% of GDP. This paper highlights that the notion that government expenditure increases economic growth should not be seen as the only policy option. A key policy priority should therefore be to design fiscal policies that take into account this non-linear relationship.
Economic AnnalsEconomics, Econometrics and Finance-Economics, Econometrics and Finance (all)
CiteScore
0.90
自引率
0.00%
发文量
6
审稿时长
18 weeks
期刊介绍：
Economic Annals is an academic journal that has been published on a quarterly basis since 1955, initially under its Serbian name of Ekonomski anali (EconLit). Since 2006 it has been published exclusively in English. It is published by the Faculty of Economics, University of Belgrade, Serbia. The journal publishes research in all areas of economics. The Editorial Board welcomes contributions that explore economic issues in a comparative perspective with a focus on transition and emerging economies in Europe and around the world. The journal encourages the submission of original unpublished works, not under consideration by other journals or publications. All submitted papers undergo a double blind refereeing process. Authors are expected to follow standard publication procedures [Instructions to Authors], to recognise the values of the international academic community and to respect the journal’s Policy.
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