THE IDENTIFICATION OFTHE FACTORS DETERMINING TURKEY’S CURRENT ACCOUNT DEFICIT

The current account balance of a country is comprised of the balance of goods and services, the balance of investments and transfers. If the total income from goods and services exports and sum of other foreign exchange earning transactions is lower than the expenditure on imports of goods and services and sum of other foreign exchange outflows, current account deficit emerges Current account deficits (CAD) constitute an important research topic in the economic literature, as they are an important indicator of the structural economic fragility of all the developed and developing countries. The CAD/GNP ratio is shown as one of the economic crisis signals. On the other hand, the country exhibits persistence characteristics in CAD under the presence of chronic structural problems and this problem has negative effects such as narrowing borrowing opportunities of the country and increasing borrowing costs. In this study, the sources of Turkey's current account deficit were examined with the use of the MARS model. In this context, it is examined whether the historical data on Turkey’s current account balance is associated with selected macroeconomic variables. The coefficients of the model selected from the models showing the existence of a coherent relationship indicate that economic growth, the increase in the public sector borrowing requirement, the increase in external debt, the increase in oil price and the appreciation of USD are important in explaining the size of the current account deficit