In the fiscal theory of price level developed by Woodford, Sims and Leeper, price level is determined through the intertemporal budget valuation equation by current and future primary surpluses. Furthermore, the new theory suggests that, monetary aggregates and seignorage revenues have no effects on the deviations in price level and an independent central bank following activist policies may lead to indeterminacy in the price level and inflationary or deflationary processes. In the study, FTPL theory is analyzed for Turkey for the 1933-2004 period in accordance with the Engle-Granger (1987) cointegration method and expanded to Vector Error Correction models. Even though the hypothesis that domestic debt has inflationary impacts cannot be rejected for the 1933-2004 period, the evidence suggests that, fiscal dominance in Turkey increased especially after the 1980’s, as a result of increasing costs of debt. Thus, economic crises negatively influenced the success of policies aiming at price stability in the long run.