<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The aim of the paper is to empirically estimate the growth-maximizing debt-to-GDP ratio in the case of Turkey. To calculate the growth-maximizing debt-to-GDP ratio FMOLS, DOLS, and CCR estimators are used for the period from 1960–2013. According to the empirical findings the growth-maximizing debt-to-GDP ratio varies between 34.3% and 38.7%. Based on a comparison of these ratios to current data (29.1% for 2018), Turkey has the capacity for additional borrowing to achieve a growth-maximizing debt-to-GDP ratio. If this additional borrowing capacity is used for public investment with a return greater than the interest cost of the additional debt economic growth will be maximized and public debt sustainability supported.</p></abstract>

The aim of the paper is to empirically estimate the growth-maximizing debt-to-GDP ratio in the case of Turkey. To calculate the growth-maximizing debt-to-GDP ratio FMOLS, DOLS, and CCR estimators are used for the period from 1960–2013. According to the empirical findings the growth-maximizing debt-to-GDP ratio varies between 34.3% and 38.7%. Based on a comparison of these ratios to current data (29.1% for 2018), Turkey has the capacity for additional borrowing to achieve a growth-maximizing debt-to-GDP ratio. If this additional borrowing capacity is used for public investment with a return greater than the interest cost of the additional debt economic growth will be maximized and public debt sustainability supported.

Growth-maximizing public debt in Turkey: An empirical investigation

Faculty of Economics and Administrative Sciences, Department of Economics

Economics and Business Review

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Growth-maximizing public debt in Turkey: An empirical investigation"}

The aim of the paper is to empirically estimate the growth-maximizing debt-to-GDP ratio in the case of Turkey. To calculate the growth-maximizing debt-to-GDP...

Growth-maximizing public debt in Turkey: An empirical investigation

Published Online: Aug 24, 2020

Page range: 68 - 87

Received: Jan 21, 2020

Accepted: Jul 27, 2020

DOI: https://doi.org/10.18559/ebr.2020.3.4

Keywords
public debt, economic growth, fiscal rule, Turkish economy

© 2020 Gokay Canberk Bulus, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Growth-maximizing public debt in Turkey: An empirical investigation

Published Online: Aug 24, 2020

Page range: 68 - 87

Received: Jan 21, 2020

Accepted: Jul 27, 2020

DOI: https://doi.org/10.18559/ebr.2020.3.4

Keywordspublic debt, economic growth, fiscal rule, Turkish economy

© 2020 Gokay Canberk Bulus, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
public debt, economic growth, fiscal rule, Turkish economy