SUSTAINABILITY OF THE CURRENT ACCOUNT DEFICT IN TURKISH ECONOMY: A PERIODIC TIME SERİES ANALYSIS WITH STRUCTURAL BREAKS (1984Q1-2017Q4)

Abstract

In this study, it is aimed to investigate the sustainability of the current account deficit level in Turkish economy, where the process of financially international expansion has accelerated until the 1980’s,  under the inter-period model developed by Husted (1992). In line with this purpose, sustainability level of the current account deficit in Turkish economy is examined periodically in a comparative perspective by using time series analysis methodology with structural breaks for the periods 1984:Q1-2001:Q4, 2002:Q1-2017:Q4, and 1984:Q1-2017:Q4. As a result of the study, it is determined that the current account deficit in Turkish economy is strongly sustainable in the period 1984:Q1-2001:Q4 while it is unsustainable or weakly sustainable in the periods 2017: Q4 and 1984:Q1-2017:Q4. It is also determined that the unsustainability of the current account deficit is at its highest level or the sustainability of the current account deficit in a weak form is at its lowest level in the period 2002:Q1-2017:Q4. These results indicate the necessity of the development and the treatment of the monetary and fiscal policy measures to remove the deficit between export revenues and import expenditures and reduce the current account deficit.