Abstract
Today, maintaining stability, transparency and budget balance are main indicators for developed and emerging countries. Corruption, causing deviation from these indicators and its results are important issues that should be researched. Because, corruption changes the composition of public expenditures leading to inefficient expenditures, as well as dissolving public revenues and affecting budget balance negatively. Increase in budget deficit causes an increase in public debt stock. In this study, the effect of corruption in Turkey on budget balance and public debt is analyzed by using Johansen cointegration, VAR (Vector Autoregressive Model) and Granger Causality methods for 1995-2019 years. Empirical findings state that there is not cointegration relationship among variables and there are causalities from budget deficits and public debt burden to corruption and from budget deficit to public debt. VAR method provides evidence that budget deficit and corruption affect each other.
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