The THE EFFECT OF ECONOMIC FREEDOMS ON PUBLIC DEBT IN TÜRKİYE

Salim Üre; Çağatay  KARAKÖY

doi:10.5937/jpmnt12-48418

Salim Üre Sivas Cumhuriyet University, Faculty of Economics and Administrative Sciences, Department of International Trade and Logistics, Sivas, Türkiye https://orcid.org/0000-0003-4207-3761
Çağatay KARAKÖY Sivas Cumhuriyet University, Faculty of Economics and Administrative Sciences, Department of International Trade and Logistics, Sivas, Türkiye https://orcid.org/0000-0001-9072-3963

DOI: https://doi.org/10.5937/jpmnt12-48418

Keywords: Public Debt, Economic Freedom, ARDL

Abstract

While the fourth industrial revolution is happening at great speed, it is an inevitable fact that without significant economic investments, countries will enter a stagnant economy and lose their international competitiveness. Large amounts of funds are needed to invest in these areas. For this reason, countries that cannot provide sufficient funds through national and international trade need public borrowing to finance investments. Given these explanations, the study focused on analyzing a dataset encompassing the share of public debt in GDP and the sub-criteria of the economic freedom index for the years 1999-2022. The objective was to explore the influence of economic freedoms on the economy. Public debt in Türkiye ARDL (Autoregressive Distributed Lag) method was used to determine the short- and long-term relationship. According to the results of the analysis, business freedom and tax burden, which are the sub-criteria of economic freedom, have a positive effect on public expenditures; Monetary freedom, trade freedom, financial freedom and investment freedom have been found to have a negative impact. It is expected that these borrowings will turn into a burden on the country's economy in the short term and gain in the long term.

References

Abubakar, A. B. & Mamman, S. O. (2021). Permanent and transitory effect of public debt on economic growth. Journal of Economic Studies, 48(5), 1064–1083. doi:10.1108/JES-04-2020-0154.

Asghar, N., Qureshi, D. S. & Nadeem, M. (2020). Institutional quality and economic growth: Panel ARDL analysis for selected developing economies of Asia. South Asian Studies, 30(2).

Asteriou, D., Pilbeam, K. & Pratiwi, C. E. (2021). Public debt and economic growth: panel data evidence for Asian countries. Journal of Economics and Finance, 45, 270–287.

Augustine, B. & Rafi, O. P. C. M. (2023). Public debt - economic growth nexus in emerging and developing economies: Exploring nonlinearity. Finance Research Letters, 52, 103540. doi:https://doi.org/10.1016/j.frl.2022.103540.

Awan, A. G. & Naeem, I. (2020). Relationship between economic freedom and economic growth in Pakistan. Global Journal of Management, Social Sciences and Humanities, 6(1), 1–29.

De Haan, J. & Sturm, J.-E. (2000). On the relationship between economic freedom and economic growth. European journal of political economy, 16(2), 215–241.

Egbetunde, T. (2012). Public debt and economic growth in Nigeria: Evidence from granger causality. American journal of economics, 2(6), 101–106.

Gündüz, F. Ö. & Çelikay, F. (2019). Kamu borç yükünün ekonomik büyüme üzerindeki etkileri: Seçilmiş ülkeler örnekleminde bir inceleme. Maliye Dergisi, 177, 247–275. (In Turkish)

Lee, S.-P. & Ng, Y.-L. (2015). Public debt and economic growth in Malaysia. Asian Economic and Financial Review, 5(1), 119–126.

Leite, N. S., Lucio, F. G. C. & Ferreira, R. T. (2019). Long-term effects of corruption control and economic freedom on economic growth. Theoretical Economics Letters, 9(8), 2965–2974.

Mahmood, K. & Azid, T. (2011). Economic freedom verses economic growth: Cross countries analysis in the form of ARDL approch. Asian Economic and Financial Review, 1(1), 14–25.

Mahmood, K., Azid, T., Chaudhry, I. S. & Faridi, M. Z. (2010). Impact of economic freedom on economic growth: the case of some selected SAARC member countries. International Research Journal of Finance and Economics, 52(1), 7–16.

Makhoba, B. P., Kaseeram, I. & Greyling, L. (2021). Investigating asymmetric effects of public debt on economic growth in South Africa: a smooth transition regression (STAR) approach. African Journal of Economic and Management Studies, 12(3), 486–498. doi:10.1108/AJEMS-02-2021-0072.

Nutassey, V. A., Nomlala, B. C. & Sibanda, M. (2023). Economic institutions, political institutions and public debt in Sub-Saharan Africa. International Journal of Emerging Markets, ahead-of-print(ahead-of-print). doi:10.1108/IJOEM-03-2023-0490.

Owusu‐Nantwi, V. & Erickson, C. (2016). Public debt and economic growth in Ghana. African Development Review, 28(1), 116–126.

Panizza, U. & Presbitero, A. F. (2014). Public debt and economic growth: is there a causal effect? Journal of Macroeconomics, 41, 21–41.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326.

Piątek, D., Szarzec, K. & Pilc, M. (2013). Economic freedom, democracy and economic growth: a causal investigation in transition countries. Post-Communist Economies, 25(3), 267–288.

Presbitero, A. F. (2012). Total public debt and growth in de&loping countries. The European Journal of Development Research, 24, 606–626.

Tanin, T. I. & Masih, M. (2017). Does economic freedom lead or lag economic growth? evidence from Bangladesh. MPRA Paper, (79446), 28. (In Turkish)

Tunçsiper, B. & Biçen, Ö. F. (2014). Ekonomik özgürlükler ve ekonomik büyüme arasındaki ilişkinin panel regresyon yöntemiyle incelenmesi. Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi, 9(2), 25-46. (In Turkish)

Turan, T. (2019). Kamu borcunun ekonomik büyüme üzerindeki etkileri: Türkiye için eşbütünleşme analizi. Maliye Dergisi, 177, 1–27. (In Turkish)