CYCLICALLY ADJUSTED BUDGET BALANCE: THE CASE OF TURKEY

Zihni Uğraş ÜLKÜ (Hazine Müsteşarlığı)
Emek GÜNAYDIN (Hazine Müsteşarlığı)

It is well known that the budgetary performance plays a crucial role in assessing and formulating fiscal policies. The actual budget balance may be a misleading indicator since it also reflects the temporary effects of the cyclical deviations of output from its underlying trend. In order to disentangle these temporary influences of output gap on the government's budget balance and get a clear picture of the budgetary performance several techniques have been developed. In this paper two different methodologies are used to calculate the cyclically adjusted budget balance of Turkey.

The results point out that recession periods together with the tight fiscal policies has significant effects on budget balance. Overall the year 2002 is expected to be a restrictive year on the fiscal side and the output level is going to be below its potential level. The estimation outcome implies that the cyclically adjusted primary budget balance figure will be much higher than the targeted primary budget surplus in 2002.