International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Causality Network between Budget Deficit, Money Supply and Inflation: An Application to Turkey
Asst. Prof. Dr. Fatma Turan Koyuncu

Although economists have different theories about the inflation, have a common view about the ultimate cause of inflation. Inflation is a monetary phenomenon and the budget deficits can cause inflation, only if it reflected in monetary aggregates. The finance of budget deficit by central bank will cause inflation through increasing liquidity. Reviewed empirical research shows that depending of which methods the budget deficits finance inflationary impact changes. In this study was used the Time-Series approach to investigate the impact of budget deficit and money supply on inflation in Turkey for the period of 1987-2013.

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