World Bank2014-08-142014-08-142014-05-20https://hdl.handle.net/10986/19321Turkey has experienced rapid growth and improved social outcomes over the past decade. Per-capita income in United States dollar (USD) terms tripled during the first decade of the 21th century, and Turkey is now the world's 17th largest economy. Fiscal policy was an important component of the reform program that delivered these successes. Prudent fiscal policy also provided the fiscal space to soften the blow of the global economic and financial crisis in 2008-2009. This report documents the central role played by fiscal policy over the last decade and presents simulation results from a computable general equilibrium model that will help inform the future direction of fiscal policy to support sustained high growth. The dynamics of fiscal outcomes and private investment and savings raise a series of tradeoffs for policy going forward. The analysis in this report suggests that public investment can crowd-in private investment and promote a more sustainable growth path. Government revenue dynamics present another set of trade-offs. These fiscal trade-offs are likely to be exacerbated as the structural transformation of Turkey's economy slows down. Structural reforms can support the fiscal policy pivot, particularly by strengthening the supply side of the economy, for instance through an increase in female labor force participation.en-USCC BY 3.0 IGOACCESS TO CREDITACCESS TO EDUCATIONACCOUNTINGACTIVE DEBTAMORTIZATIONSASSET CLASSESBANK CREDITBANKING CRISISBANKING SECTORBANKING SUPERVISIONBEQUESTBINDING CONSTRAINTBOND SPREADSBORROWINGBORROWING COSTSBORROWING REQUIREMENTCAPITAL FLOWSCAPITAL FORMATIONSCAPITAL GAINSCAPITAL INFLOWCAPITAL INFLOWSCAPITAL INVESTMENTCAPITAL MARKETSCAPITAL OUTFLOWSCAPITAL SHARECAPITAL STOCKCCCENTRAL BANKCONSUMER CONFIDENCECONTINGENT LIABILITIESCREDIT MARKETSCURRENCYCURRENT ACCOUNTCURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSDEBT BURDENDEBT FINANCINGDEBT MATURITIESDEBT MATURITYDEBT RATIODECENTRALIZATIONDEMOGRAPHICDEMOGRAPHIC PROFILEDEVELOPING COUNTRIESDISPOSABLE INCOMEDOLLAR VALUEDOMESTIC CREDITDOMESTIC DEBTDOMESTIC DEBT MARKETSDOMESTIC INTEREST RATESEARNINGSECONOMIC COOPERATIONECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC OPPORTUNITIESECONOMIC POLICYECONOMIC REFORMSEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET ECONOMIESEMERGING MARKETSEMPLOYEEEMPLOYEREMPLOYER CONTRIBUTIONSEMPLOYERSEMPLOYMENT GROWTHENROLLMENTEXCHANGE RATEEXPENDITUREEXTERNAL CAPITALEXTERNAL DEBTEXTERNAL FINANCINGFAMILIESFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL ASSETSFINANCIAL CRISISFINANCIAL GLOBALIZATIONFINANCIAL MANAGEMENTFINANCIAL MARKETSFISCAL DEFICITFISCAL DEFICITSFISCAL EFFORTFISCAL POLICYFIXED CAPITALFLEXIBLE EXCHANGE RATEFOREIGN CAPITALFOREIGN DIRECT INVESTMENTFOREIGN FINANCINGFOREIGN INFLOWSFORMAL SAVINGSGLOBAL CAPITALGLOBAL ECONOMYGLOBAL RISKGLOBALIZATIONGOVERNMENT ACCOUNTSGOVERNMENT EXPENDITURESGOVERNMENT PAPERGOVERNMENT REVENUEGOVERNMENT REVENUESGOVERNMENT SPENDINGGREATER ACCESSGROSS DOMESTIC PRODUCTGROWTH RATESHOLDINGSHOME OWNERSHIPHOMEOWNERSHOMEOWNERSHIPHOUSEHOLD INCOMESHOUSEHOLD SAVINGHOUSEHOLD SAVING RATESHOUSEHOLD SAVINGSHOUSEHOLDSINCOME LEVELSINCOME TAXINCOME TAXESINFLATIONINFLATION RATESINFORMAL WORKERSINFORMATION TECHNOLOGYINSURANCEINTEREST EXPENDITURESINTEREST PAYMENTINTEREST PAYMENTSINTERNATIONAL CAPITALINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCEINTERNATIONAL STANDARDSINTERNATIONAL TRADEINVESTMENT FINANCINGINVESTMENT PORTFOLIOINVESTMENT RATEINVESTMENT RATESINVESTMENT SPENDINGJOB CREATIONLABOR FORCE PARTICIPATIONLABOR MARKETLIFE EXPECTANCYLIQUIDITYLOANLOCAL GOVERNMENTSLOW INTEREST RATESMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMACROECONOMIC UNCERTAINTYMARKET CONSTRAINTSMARKET REFORMSMARKET TRENDSMICRO DATAMINIMUM WAGEMINIMUM WAGESMONETARY FUNDMONETARY POLICYNATIONAL SAVINGNATIONAL SAVINGSNOMINAL INTEREST RATESOUTPUTOUTPUT RATIOPENSIONPENSION FUNDPENSION FUND CONTRIBUTIONSPENSIONSPERSONAL INCOMEPHYSICAL CAPITALPOLITICAL STABILITYPORTFOLIOPORTFOLIO FLOWSPORTFOLIO INVESTMENTPOSITIVE DEBTPRIVATE FINANCINGPRIVATE INVESTMENTPRIVATE SAVINGPRIVATE SAVINGSPRIVATIZATIONPRODUCTION CAPACITYPROPERTY TAXPROPERTY TAXESPUBLIC DEBTPUBLIC DEBT MANAGEMENTPUBLIC FINANCEPUBLIC FINANCESPUBLIC INVESTMENTPUBLIC INVESTMENTSPUBLIC POLICYPUBLIC SAVINGPUBLIC SAVINGSRAPID GROWTHREAL ESTATEREAL EXCHANGE RATEREAL INTERESTREAL INTEREST RATEREAL INTEREST RATESRECEIPTSREGULATORY FRAMEWORKRETIREMENT AGEREVOLVING FUNDSRISK AVERSIONRISK MANAGEMENTSAVINGS ACCOUNTSSAVINGS RATESAVINGS RATESSOCIAL DEVELOPMENTSOCIAL FUNDSOCIAL FUNDSSOCIAL SECURITYSOURCES OF FINANCESOVEREIGN BONDSOVEREIGN RISKSUSTAINABLE GROWTHTAXTAX COLLECTIONTAX POLICYTAX RATETAX RATESTAX SYSTEMTELECOMMUNICATIONSTREASURYUNEMPLOYMENTUNEMPLOYMENT INSURANCEUNIONWEALTH EFFECTWEALTH EFFECTS10.1596/19321