Testing of Twin Deficit Hypothesis in Turkey and PIIGS Countries: Panel Data Analysis(Türkiye ve PIIGS Ülkelerinde İkiz Açık Hipotezinin Testi: Panel Veri Analizi)

Abstract

This study tests the validity of Twin Deficit Hypotesis for Turkey and PIIGS (Portugues, İreland, İtaly, Gereece, Spain) for period 1986-2018. There are incomplete observations showing random distribution in 33 years of data for countries. For this reason, the study was carried out in accordance with the unbalanced panel data analysis. Following autocorrelation and unit root tests in accordance with the data conditions, we have used Pooled Mean Group Estimators (PMGs) for estimation of short and long term coefficients. In the model, the Twin Deficit Hypothesis was confirmed for the panel mean in the long run. However, when the unit-specific results of the model are examined, the long-term coefficients for Ireland, Italy, Greece and Spain are significant. No significant short- or long-term relationship could be found for Portugal and Turkey.

Keywords

• twin deficit
• turkey
• piigs
• pmgs