International Conference on Eurasian Economies
9-11 September 2015 – Kazan, RUSSIA
Paper detail
Paper ID : 1380
Status : Paper published
Language : Turkish
Topic : International Trade and Globalization
Presenter: Asst. Prof. Dr. Murat Can Genç
Session : 4C Uluslararası Ticaret II
Is the Compensation Hypothesis Valid for Turkey?
Telafi Hipotezi Türkiye İçin Geçerli midir?
- Asst. Prof. Dr. Murat Can Genç (Karadeniz Technical University, Türkiye)
- Asst. Prof. Dr. Osman Murat Telatar (Karadeniz Technical University, Türkiye)
Abstract
Increases of trade openness in an economy raise the external risks in globalization. The societies demand on increases of the government expenditure in order to compensate for their risks. Hence the more trade openness may cause the more government size. This relation is named as compensation hypothesis in the literature has been comprehensively discussed by Rodrik (1998) but started by Cameron (1978). This paper attempts to analyze the cointegration and causality relationships between trade openness and government size in Turkey, utilizing annual data for the period 1980–2013. The existence of the long run relationship between trade openness and government size is investigated by applying Engle and Granger (1987) cointegration test. The empirical findings of cointegration test stated that the series are cointegrated. On the other hand the results of error correction model indicate that there is a unidirectional causality from trade openness to government size. The significance of this results state that the compensation hypothesis is valid for Turkey.
JEL codes: F41
Genç, Murat Can, Telatar, Osman Murat (2015). "Is the Compensation Hypothesis Valid for Turkey?" in Proceedings of International Conference of Eurasian Economies 2015, pp.437-444, Kazan, RUSSIA.
DOI: https://doi.org/10.36880/C06.01380
Session 4C: Uluslararası Ticaret II
