Excessiveness of current account deficits in Turkey

Abstract

Definition of the current account balance as the difference between the national cash flow and the consumption is a widely used one. According to this argument, cointegration relation between the cash flow and the final consumption expenditure for Turkey was searched by different empirical criteria between first quarter of 1987 and last quarter of 2009 to judge whether they move together or not in the long run. Even though the cash flow and the consumption series move together with structural breaks, cash flow seems to compensate 81 percent of the imports until the break in third quarter of 2001 whereas it only compensates 77 percent after 2001. This means that, the path of unsustainable consumption behavior become more and more excessive after 2001. © International Economic Society.