Probabilistic Approach to the Future Course of Fiscal Stability in Turkey: 1958 – 2025

Authors : Cansın Kemal CAN

Pages : 8-18

Doi:10.34110/forecasting.1055932

View : 8 | Download : 6

Publication Date : 2022-08-31

Article Type : Research Paper

Abstract :This study gauges the fiscal stability in Turkey with a forward-looking approach using the fan-chart as a tool. Succinctly speaking, this tool portrays the probability distribution of each public debt realization in the forecast horizon. We construct this chart by simulating the debt/GDP ratio one thousand times using the bootstrapped error terms within a five-year forecast horizon. Our findings indicate that the ARinsert ignore into journalissuearticles values(1); coefficient in the data generating process has a value less than unity which implies overall fiscal stability via an implosive debt pattern. Also, the simulation results indicate that the baseline scenario is around 25 % for the debt/GDP ratio over the forecast horizon and even in the worst-case scenario, the debt/GDP ratio is not likely to exceed 40 % level with a probability of 90 %.
Keywords : fan chart, public debt, forecast