The Effects of Political Fragmentation on Fiscal Deficits in Turkey

Recent theoretical and empirical research has considered how differences in political arrangements affecting national policy formation might explain variation in fiscal policies pursued (Volkerink and de Haan, 2001). The experience of high government deficits of developed nations in the 1980s led researchers to analyze the reasons for this and among other factors they have argued that political variables could also explain budget deficits (Sutter, 2003). This study aims to investigate the effects of the political parties for fiscal deficits in Turkey for 1976-2004 period. Our results show that the most important variable in explaining the budget deficit to GDP ratio in Turkey is its lagged value. The political dispersion index variable, which measures the effect of the number of parties in the government in power, has proven to have a minor effect. Only the coalition governments with two or more parties are found to have higher budget deficit to GDP ratios. Ideology of the governments in power is important for the budget deficit to GDP ratio when it is considered with the number of parties in the government in power. In general, it can be said that polarization, fragmentation and ideology of the governments do not play an important role in explaining the budget deficit to GDP ratio.Budget deficits, political fragmentation, dispersion indexes

TESTING FOR MULTIPLE STRUCTURAL BREAKS: AN APPLICATION OF BAI-PERRON TEST TO THE NOMINAL INTEREST RATES AND INFLATION IN TURKEY

ABSTRACT This paper aims to tests for multiple structural breaks in the nominal interest rate and inflation rate using the methodology developed by Bai and Perron (1998). The monthly data on Turkish 90 days time-deposits interest rate and consumer price index inflation rate over the period of 1980:1-2004:12 are used. The empirical results give little evidence of mean breaks in the interest rate series. However, the data on inflation rates is consistent with two breaks that are located at 1987:9 and 2000:2.ÖZETBu çalışmada, Bai ve Perron'un (1998) yöntemi kullanılarak, nominal faiz oranları ve enflasyon oranları için birden fazla yapısal kırılmanın test edilmesi amaçlanmaktadır. Türkiye'nin 1980:1-2004:12 dönemini kapsayan, aylık, 90 günlük mevduat faiz oranları ve tüketici fiyatları endeksinden oluşturulan enflasyon oranları serileri kullanılmaktadır. Ampirik bulgular, faiz oranları serisinde bir yapısal kırılma bulunduğu yolunda zayıf sonuçlar vermektedir. Ancak, enflasyon oranları serisinde, 1987:9 ve 2000:2 dönemlerinde olmak üzere, iki adet ortalama kırılması bulunduğu doğrulanmaktadır

DO AGRICULTURAL HOUSEHOLDS USE INTERNATIONAL MIGRATION AS AN INCOME DIVERSIFICATION STRATEGY?

Many agricultural households in developing countries depend on international migration and nonfarm work to cope with the economic risks and uncertainty associated with farming. We examine the effects of international migration and remittances on rural households’ participation in nonfarm jobs and the earnings generated from these jobs. Using data on agricultural households in Albania, results indicate that remittances received from migrant household members induce reallocation of household labor to nonfarm self-employment jobs, and increase income from at-home farming. Overall, international migration contributes to rural development in Albania through the positive impact of remittances on households’ ability to diversify income and reduce income risks associated with farmin

An implicit model of adjustment costs in differential input demand systems

This study provides a theoretical framework for implicitly accounting for adjustment costs in differential systems of factor demand relationships. Differential factor demand relationships, as they are represented by parameters of the cost function, are generally assumed to be linear in the parameters in the existing empirical literature. I argue that this linearity might not always hold because firms may incur adjustment costs that are inherent in the act of adjusting the mix of inputs applied in the underlying production technologies. Implications of convex and nonconvex adjustment costs for estimating differential systems as well as price and substitution elasticities are explored

DO AGRICULTURAL HOUSEHOLDS USE INTERNATIONAL MIGRATION AS AN INCOME DIVERSIFICATION STRATEGY?

Many agricultural households in developing countries depend on international migration and nonfarm work to cope with the economic risks and uncertainty associated with farming. We examine the effects of international migration and remittances on rural households’ participation in nonfarm jobs and the earnings generated from these jobs. Using data on agricultural households in Albania, results indicate that remittances received from migrant household members induce reallocation of household labor to nonfarm self-employment jobs, and increase income from at-home farming. Overall, international migration contributes to rural development in Albania through the positive impact of remittances on households’ ability to diversify income and reduce income risks associated with farmin