Relationship of tax revenues and public expenditures: ardl bounds testing approach in the case of turkey

Public expenditures and tax revenues are used as practical fiscal policy tools in achieving economic targets. Public expenditures and tax revenues are significant for policymakers, especially in reducing budget deficits. For this purpose, in this study, the relationship between tax revenues and public expenditures for Turkey was examined using the ARDL bounds test approach and the Toda-Yamamoto causality test by using data for the periods 2006:Q1-2022:Q2. Considering the result obtained from the study, it was determined that there is no long-term relationship between public expenditures and tax revenues in the ARDL test results. However, according to the Toda-Yamamoto test, it has been determined that public expenditures are the Granger cause of tax revenues. In this direction, when the study’s empirical results are examined, it is concluded that the “Expenditure- Tax Hypothesis” is valid in the Turkish economy.