Velocity Effect On Inflationary Growth of Turkey: Evidence From Co-integration Analysis and Granger's Causality Test

The Turkish economy has experienced high and persistent inflation rates in the last two decades. This inflation has persisted despite many unsuccessful stabilization policies, which have caused volatility in macro-economic indicators. The main aim of this paper is to analyze the impact of velocity on inflationary trend in Turkey over the period between 1996 and 2001. We assumed that there is a direct relationship between the two factors. However, velocity is not the major cause of inflation. The integration and co-integration tests have been adopted on monthly time series data to test the validity of the model by adding some control variables. Results show that velocity has a weak and negative effect on the inflationary growth of Turkey during this period. The effects of other control variables on inflation growth have also been tested. Some aspects of this linear relationship have been obtained by Granger’s Causality Test.Velocity, Co-Integration Tests, Error Correction Mechanism, Granger’s Test

The role of education in economic development: a theoretical perspective

Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.Human Development, Economic Growth, Poverty, Labour Productivity, Education, Technology, Trade, Health

Economic and social issues of east and southeast turkey: policy implications

ABSTRACT Today, the Southeastern and Eastern (SE&E) parts of Turkey are facing many problems. The clear difference in economic development between the Western and Eastern parts of Turkey has dropped the Eastern part into deep crises. Many have debated these crises and postulated different causes. Some say that it is an identity crisis and some argue that there is no substance, the economic bias, created against the Eastern part of Turkey which on the whole is inhabited by a different ethnic group. In this study, the current educational institutions and the economic situation in this region and the role of pre-university education in economic development of these parts of Turkey will be analyzed. Thus, the educational, economic and social structures of the SE&E parts of Turkey will be compared with Turkey as a whole. Based on these findings generalization will be made on factors causing the political instability that have been ongoing for many years in SE&E. The study will put forward suggestions for solutions to these problems.Education; Poverty; Regional Disparities; Southeast Turkey

Turkey and European Union Relations: Concept of Customs Union

Turkey is the only pluralist secular democracy in the Moslem world and has always targeted herself as being part of the western world and values. Turkey started to establish close economic relations with Europe by the 1963 Ankara Agreement. By 1995, Turkey abolished most of the barriers in her trade through a customs union agreement with the European Union. Customs union is widely discussed in the sense that the terms of trade between the two sides have not evolved in favour of Turkey. However evidence shows that Turkey did not experience any extreme changes in its import figures as were feared before the beginning of the agreement. As a result of customs union, economically Turkey became more advantageous than many other candidate countries despite her unhealthy economic statistics especially in the area of inflation and per capita income. Turkey would have the chance to benefit more from the customs union after it completes its ongoing economic reforms, which would bring more stability and power to the Turkish economy.

Is Per Capita Real GDP Stationary in the OECD Countries? Evidence from a Panel Unit Root Test

This paper examines the stationarity of real GDP per capita for 27 OECD countries during the period 1950 to 2004. Using ADF unit root test on single time series, it is found that real GDP per capita series of most OECD countries have unit root. This outcome, however, might be due to the generally low power of this test. The aim of this paper is to reconsider this issue by exploiting the extra information provided by the combination of the time-series and cross-sectional data and the subsequent power advantages of panel data unit root tests. We apply the test advocated by Im, Pesaran and Shin (1997). The results overwhelmingly indicate that real GDP per capita series among OECD countries are nonstationary.Real GDP per capita, Stationary, Panel Unit root tests, OECD

The Demand for Money in Transition Economies

This paper examines the long-run determinants of the demand for money in ten transition countries using panel data for the 1994-2005 period. Using panel unit root tests we rejected the the null hypothesis of the nonstationarity and employed the feasible generalized least squares (FGLS) model. Consistent with theoretical postulates, it is found that (a) the demand for money in the long-run positively responds to real GDP and inversely to the inflation and the real effective exchange rate and (b) the long-run income elasticity is about unity.demand for money, transition economies, panel unit root test, feasible GLS

Testing Purchasing Power Parity in Transition Countries: Evidence from Structural Breaks

This study examines the validity of the purchasing power parity (PPP) in 8 transition countries for monthly data from 1992:1 to 2009:1. While results from both the ADF unit root and the KPSS unit root test indicate that PPP does not hold for Bulgaria, Croatia, Czech Republic, Hungary, Macedonia (FYR), Poland, Romania and Slovak Republic. In the presence of structural breaks, PPP holds only for Bulgaria and Romania it does not hold for the other 6 transition countries. Testing the stationarity of real exchange rate series by using four types of unit roots tests, the evidence suggests that real effective exchange rate is nonstationary and thus PPP doesn’t hold for all 6 transition countries in the long run. All results emphasized that there is weak evidence about the long-run PPP hypothesis in transition countries and the validity of PPP remains a controversial and unsettled issue.real exchange rate, unit root tests, structural breaks, transition countries

Electricity Consumption and Economic Growth Nexus: A Multivariate Analysis for Turkey

This study examines the short-run and long-run causality issues between electricity consumption and economic growth in Turkey for 1968–2006 period by using Granger causality models augmented with a lagged error-correction term. The bounds F–test for cointegration test yields evidence of a long-run relationship between employment ratio, electricity consumption per capita and real GDP per capita. The overall results from the three error-correction based Granger causality models show that there is an evidence of unidirectional short-run, long-run and strong causalities running from the electricity consumption per capita to real GDP per capita. But, there is no causal evidence from the real GDP per capita to electricity consumption per capita. In other words, “Growth hypothesis” is confirmed in Turkey. This suggests that electricity consumption plays an important role in economic growth.electricity consumption, economic growth, causality

Foreign Direct Investment and Growth: An Empiricial Investigation Based on Cross-Country Comparison

This paper investigates empirically the impact of FDI on economic growth of Turkey and Pakistan over the period of 1975-2004. To analyse the causal relationship between FDI and economic growth, the Engle-Granger cointegration and Granger causality tests are used. It is found that these two variables are cointegrated for both countries studied. Our empirical findings suggest that it is GDP that causes FDI in the case of Pakistan, while there is strong evidence of a bi-directional causality between the two variables for Turkey.Economic growth, foreign direct investment, Granger causality

KAUZALNOST IZMEĐU MMF-ovih KREDITA I MAKROEKONOMSKIH INDIKATORA: PRIMJERI ZEMALJA U RAZVOJU, 1975-2004

Using panel data for 88 developing countries over the period 1975-2004, this paper analyzes the way of causality between selected ten macroeconomic variables and IMF credits. The causality has been found between IMF credits and macroeconomic indicators in eight out of ten cases in the study. Consequently, overall, it can be said that IMF credits (or IMF stabilization programs) are worsening the macroeconomic performance of developing countries rather than improving their economic problems.Koristeći panel podatke 88 zemalja u razvoju u periodu od 1975. do 2004., rad analizira kauzalnost između deset odabranih makroekonomskih varijabli i kredita MMF-a. Kauzalnost MMF-ovih kredita i makroekonomskih indikatora je pronađena u osam od deset slučajeva obuhvaćenih istraživanjem. Stoga se može zaključiti da krediti MMF-a (ili MMF-ovi stabilizacijski programi) više pogoršavaju makroekonomske performanse zemalja u razvoju nego što umanjuju njihove ekonomske probleme