Abstract
This paper tests the causal relationship between seignoarage and domestic debt for Turkey, based on annual data. The econometric model is based on the Johansen cointegration analysis for the long-run. In the long-run we find a cointegrating relationship between seignorage and domestic debt. This sitution shows that Turkish public sector is not facing strict budgetary constraints. In fact, (i) the possibility of creating debt was favoured by the low independence level of Turkish Central Bank and (ii) the expansion of government expenditure for political purposes weakened this link.