Abstract
The main goal of the countries that want to increase the prosperity of their citizens is economic growth. As a result of worldwide economic and prosperity growth, consumption and energy usage increased significantly. Insufficiency of the local resources lead the countries to international trade. Growth of international trade and increase of financial transactions made the current account deficit (CAD) problem very important for the countries. Therefore, countries develop policies in order to understand the causes of the CAD and resolve them. Some of the factors that cause the CAD are excessive appreciation of the country’s currency, fast economic growth and increase in the imported oil prices. Increase of the CAD as a share of GDP lead economies to currency and/or financial crises by increasing their fragility. Thus, CAD preserves its actuality and significance as a problem for economies. In the last decades, the CAD issue became one of the chronical problems of Turkish economy. In this context, it is seen that Turkish economy adopted the growth with CAD strategy in last 20 years and always have CAD in this period except 1998 and 2001. In this study, the causality relation and long-term relationship of Turkey's current account balance (CAB), GDP, brent type oil prices, and real exchange rate are determined by using data of 2000: Q1-2016: Q2 . According to results, there is a bidirectional causality between CAD and GDP and one-way causality from oil prices to both GDP and CAD. In addition to causality relation, according the cointegration analysis, oil prices and GDP increase the CAD in the long run.
Highlights
The liberalization of international trade and the abolition of financial restrictions have increased the trade of goods and services and financial transactions between countries
It has shown that Turkey, whose trade was liberated after 1980, started to have current account deficit (CAD) problem and this problem reached to a more serious level with the acceleration of economic growth after 2000
According to the results of the analysis between CAD and the main factors affecting Turkey's current account deficit (GDP, oil prices, and real exchange rate), it was determined that the rise in GDP and oil prices cause the CAD to increase
Summary
The liberalization of international trade and the abolition of financial restrictions have increased the trade of goods and services and financial transactions between countries. The increase in international transactions has led countries to have the external deficit and external surplus situation. Nowadays, these current account imbalances are used as country's economic evaluation criteria. The USA, which is obviously a developed country, has the highest current account deficit in recent years, but it has a comparative advantage because it differs in terms of technology and capital-intensive goods from developing countries. One of the reasons of this is the decline in imports that is the result of the drop in purchasing power due to the impact of crises Another reason is the increased export revenues due to the effects of shuttle trade
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