We examine the relationship between the government size and economic growth by using threshold regression model and quarterly data over the period 1998:1-2015:1 for Turkey. Our results provide a strong evidence for the existence of a non-linear relationship. The estimated threshold levels, as a percentage of GDP, are 16.5 for the government total expenditures, 12.6 for consumption expenditures and 3.9 for investment expenditures. We find that an increase in the government size leads to a significant rise (decline) in economic growth rate when the government size is below (above) the threshold level, confirming the predictions of Armey curve. Our findings have a clear policy implication: since the realized government consumption and total expenditures are well above the estimated threshold levels, a reduction in the government size would boost the growth rate.

We examine the relation between the government consumption expenditure and output growth volatility in 57 low and middle income countries by using both static and dynamic panel methods. It seems that the results of these methods largely differ from each other. Contrary to some previous results reported in the literature, we present a strong evidence for a negative relation between government expenditure and volatility in low and middle income countries. We also conclude that the volatilities of government consumption, trade openness and investment are signifi cant in explaining the growth volatility. To have a more stable economy, policy makers in these countries should pay more attention to some issues. In this context, we think that a change in the tax and expenditure system in order to make automatic stabilizers work better would be helpful. Additionally, it is important to have a sound fi scal and monetary position to effectively carry out countercyclical policies when needed. Moreover, adopting and implementing clear and fl exible rule-based economic policies should be considered. Finally, improving the institutional structure and policy making capacity must be an ultimate aim to reduce the economic volatility.

This study aims to examine the sustainability of current account deficits for Hungary, Poland, Czech Republic and Turkey over the period 1998Q1:2014Q2, with a special attention to the Turkish case, by applying the theoretical model of Steven Husted (1992). The main motive for the choice of time span is that the period comprises the outcomes of two important crises Turkish economy experienced in 2001 and 2008. The empirical testing procedure of the sustainability is twofold so as to be linear and non-linear. Both linear and non-linear test results provide evidence that the current account deficit is unsustainable for Turkey, Poland and Czech Republic. On the other hand, linear and non-linear test results lead to a conflicting evidence for Hungary. We conclude that there is a need to reduce the current account deficit for the countries examined. Otherwise, a sharp adjustment may be inevitable.

Using SILC data, we present a general framework for the distribution of poverty in Turkey, over the period 2005-11 in terms of various household characteristics. We further examine those explored in this study are age, education, employment status, social security registration, health status, household size, household composition and, income acquisition status. Consistent with the existing literature, our results indicate that in Turkey, poverty distribution differentiates according to various socio-economic factors, while these factors significantly affect the dynamics of poverty entries and poverty exits.

It is suggested that international trade has a positive effect on the growth rate of economies. Although a vast literature has illustrated that open or more liberalised economies grow faster, the specific factors that promote this process have only recently begun to be investigated. We belive that there is a non-linear relationship between trade and growth, with the impact depending on a number of macroeconomic factors, i.e. the magnitude and even the direction of the effect of trade on economic performance might depend on other macroeconomic variables. Within this framework, our study aims to investigate the possible non-linearity in the trade-growth relationship, with a special focus on the financial deepening level for the selected Central and Eastern European (CEE) countries. Unlike the existing empirical literature on trade-growth nexus for the CEE economies, we utilise threshold regression techniques, where we allow the size and direction of the impact of trade on growth to differ between regimes, conditioning on the financial deepening level of these countries. Regarding credit growth and investment/credit ratio as thresholds, the countries in the upper regime benefit significantly more from trade.