Transition to Balanced Budget Policy in the Republican Era

Abstract

The budget deficits are avoided for economic, political and ideological reasons, as the equilibrium of the budget in the nineteenth century was seen as an important measure of financial and political independence. Budget deficits cause borrowing, unrequited money printing and inflation. Before the First World War, the most important source of inflation is considered to be budget deficits. Budget deficits, on the one hand, disrupt the current economic order and disrupt the functioning of the market mechanism. On the other hand, the state's constant foreign borrowing to close the budget deficits causes a country to lose its political and economic independence. The Ottoman Empire is a typical example in this regard (Duverger, 1955: 81-2). For these reasons, it is important to avoid budget deficits and establish a balance in the budget. After the republic was established, great importance was given to the transition from open budget to equivalent budget. Reasons for transition to the Equivalent Budget Policy and how the transition is made are the main topics of this article. Then, in the context of the World Crisis, the Equivalent Budget - Sound Monetary Policy will be mentioned.