Political economic and institutional determinants of limited government in Turkiye

This study examines the economic and political determinants of limited government in Türkiye over the period 1996–2024. Limited government is measured using a composite index constructed as the equally weighted mean of the judicial and legislative constraints on the executive indices provided by the Varieties of Democracy dataset. Public expenditure, public-sector employment, trade openness, and political stability are included as explanatory variables. The relationships are analysed using the autoregressive distributed lag bounds-testing approach. The results provide evidence of cointegration among the variables. The negative and statistically significant error-correction coefficient indicates that approximately 44.3% of deviations from the long-run equilibrium are corrected within one year. The long-run estimates show that public-sector employment and trade openness are negatively associated with limited government, while political stability has a positive and statistically significant relationship. Public expenditure also has a negative coefficient, although its significance is limited to the 10% level. In the short run, political stability positively affects limited government, whereas public-sector employment and trade openness exhibit weaker negative relationships. Diagnostic and stability tests generally support the adequacy of the estimated model. Overall, the findings indicate that limited government in Türkiye depends not only on the fiscal and administrative scale of the state but also on the political and institutional environment. Given the small sample, the findings should be interpreted as exploratory associations rather than definitive causal effects.