Growth of Public Expenditures in Turkey during the 1950-2004 Period: An Econometric Analysis

The share of government  expenditures in GDP has displayed steady  increase in both developed and developing countries during  the 20th century. This observation has  led economists to explore the reasons and the  underlying mechanism both theoretically and empirically. Several hypotheses on  the relationship of public expenditures  with income growth, budget deficits and  government revenues have been reexamined  in the light of recent developments in  econometric methods. This study presents  results from testing three hypotheses, namely,  the Wagner Hypothesis, the Buchanan- Wagner Hypothesis and the Tax-Expenditure  Hypothesis, using data from Turkey for the period 1950-2004. In the empirical  section we employed time series  econometric techniques to analyze long run economic  relationships. Several unit root and  cointegration tests are utilized to see the robustness  of results across different methods.