External balance, fiscal policy, and growth in Turkey

Turkey has, alone among the high debt countries, managed to maintain a high growth rate after rescheduling its debt. This paper discusses two issues this experience raises. One, how did Turkey translate the extra breathing space that continued access to foreign financing gave it, into sustained high real growth? Second, what are the prospects for a repeat performance? In Section II of the paper, the analytical structure of the model is presented, and the link between private and public investment and the growth rate of real GDP is econometrically established. Section III uses this model to assess the public sector's role in Turkey's macroeconomic achievements since 1980. whilst Section IV makes use of the model to focus upon the future.