Fiscal debt management, accumulation and transitional dynamics in a CGE model for Turkey

Date
1998
Authors
Diao, X.
Roe, T. L.
Yeldan, A. E.
Advisor
Instructor
Source Title
Canadian Journal of Development Studies
Print ISSN
0225-5189
Electronic ISSN
2158-9100
Publisher
Routledge
Volume
19
Issue
2
Pages
343 - 375
Language
English
Type
Article
Journal Title
Journal ISSN
Volume Title
Abstract

We use a dynamic general equilibrium model based on intertemporally optimizing agents to study alternative debt management policies for the Turkish economy. The model is based on the neoclassical growth theory in its adjustment to steady state dynamics, and on Walrasian general equilibrium theory of a small open economy in attaining equilibrium in its commodity and factor markets. Key features of the model are its explicit recognition of the distortionary consequences of excessive borrowing requirements of the public sector through increased domestic interest costs; and endogenous determination of the private work force participation decisions in response to changing tax incidences. The model results suggest that reliance on indirect taxes, as in the current stance of the fiscal authority, has appealing results in terms of attaining fiscal targets, yet it suffers from distortionary consequences and loss of economic welfare.

Course
Other identifiers
Book Title
Keywords
Debt management, General equilibrium theory, CGE model
Citation
Published Version (Please cite this version)