Erciyes Akademi, cilt.35, sa.4, ss.1518-1533, 2021 (Hakemli Dergi)
Together with trade openness and globalization, the risks and uncertainties faced by countries are also
increasing. Government expenditure is one of the important policy tool used to minimize the effects of these
risks. Increases and decreases in government expenditures due to openness and globalization are examined
in the literature within the framework of compensation and efficiency hypotheses. In this study, the validity
of Turkey's compensation and efficiency hypotheses was examined using annual data for the period 1970-2018
and RALS co-integration and bootstrap causality tests. The results of the analysis support the efficiency
hypothesis, which states that the increase in trade openness affects government expenditures negatively, and
the compensation hypothesis, which states that the increase in globalization increases government
expenditures. In addition, according to the results of the bootstrap causality test, there is a one-way causality
relationship from trade openness to government expenditures.