Political Business Cycles in Turkey: Is It the Case?

Political business cycle studies have arisen as alternatives to pure business cycle studies. Each country encounters political business cycles differently. Even in some developed countries, the existence of them is a big question for academicians. In this paper, we try to answer the question whether there are opportunistic political business cycles in Turkey or not. Our study focuses on both fiscal and monetary policies/variables to discover the Turkish case. We use a simple but powerful time series model to test the existence of them. Empirical results show that it is clear that there are quite perfect opportunistic political business cycles in Turkey. This finding is strongly supported by budget deficit, government expenditure, transfer payments (except interest payments), central bank credits, currency in circulation, and M1 money supply.