Dynamic Interdependence and Volatility Transmission in Turkish and European Equity Markets

This paper investigates dynamic interdependence, price and volatility transmissions and financial integration between Turkey and major equity markets in EU and USA. We attempt to quantify the dynamic relationship among developed stock exchanges of Germany, France, Britain, US and Turkey, an important emerging market. Using daily data on stock prices we analyze price and volatility spillovers in a vector autoregression-dynamic conditional correlations-multivariate generalized autoregressive conditional heteroskedacticity (VAR-DCC-MVGARCH) framework. This approach enables us to measure the extent to which these equity markets are interrelated by taking into account the time-varying variance-covariance structure. Since the major trade partners of Turkey are EU countries it is of interest to examine any changes in the structure of volatility spillovers. To this end, we analyze the effects of customs union agreement between Turkey and EU on the dynamic interdependence of stock markets by dividing the sample into two periods. The analysis reveals that, although they are small in magnitude as compared to their counterparts in developed markets, the conditional correlations can be assumed to be constant in the pre-customs union agreement while it fluctuates significantly in the post-customs union agreement.

Growth of Public Expenditures in Turkey during the 1950-2004 Period: An Econometric Analysis

The share of government expenditures in GDP has displayed steady increase in both developed and developing countries during the 20th century. This observation has led economists to explore the reasons and the underlying mechanism both theoretically and empirically. Several hypotheses on the relationship of public expenditures with income growth, budget deficits and government revenues have been reexamined in the light of recent developments in econometric methods. This study presents results from testing three hypotheses, namely, the Wagner Hypothesis, the Buchanan- Wagner Hypothesis and the Tax-Expenditure Hypothesis, using data from Turkey for the period 1950-2004. In the empirical section we employed time series econometric techniques to analyze long run economic relationships. Several unit root and cointegration tests are utilized to see the robustness of results across different methods.Public expenditures, Wagner Hypothesis, Buchanan-Wagner Hypothesis, Tax-Expenditure Hypothesis, Turkey

Invisible Hand in the Process of Making Economics or on the Method and Scope of Economics

As a social science, economics cannot be reduced to simply an a priori science or an ideology. In addition economics cannot be solely an empirical or a historical science. Economics is a research field which studies only one dimension of human behavior, with the four fields of mathematics, econometrics, ethics and history intersecting one another. The purpose of this paper is to discuss the two parts of the proposition above, in connection with the controversies surrounding the method and the scope of economics: economics as an applied mathematics and economics as a predictive/empirical science.Invisible hand, Scope and method in economics, Economics as an applied mathematics, Economics as an empirical science, Economics as ideology.

Do real exchange rates contain a unit root? Evidence from Turkish data

This study explores whether the long-run purchasing power parity (PPP) hypothesis holds for selected real exchange rates from Turkish economy during the period 1982M1-2003M12. In addition to conventional unit root tests, five different unit root test procedures have been applied including efficient point-optimal tests, extended M tests and GLS-detrended variants of DF tests, to four monthly real exchange rate series defined in terms of both producer and consumer price indices. The countries analysed are the USA, the UK, Germany and Italy which are major trade partners of Turkey. Mixed evidence is found for the long-run PPP hypothesis when real exchange rate is defined in terms of German DM and Italian Lira. However, the empirical analysis reveals that the PPP hypothesis holds strongly in the long-run for the UK� and US$ based real exchange rates series using either PPI or CPI. In corroboration with other studies in the literature, the bias correlated half-life estimates suggest relatively faster speeds of adjustment supporting the view that the deviations from the PPP rate dissipate rather quickly for relatively high inflation countries.

Invisible hand in the process of making economics or on the method and scope of economics

As a social science, economics cannot be reduced to simply an a priori science or an ideology. In addition economics cannot be solely an empirical or a historical science. Economics is a research field which studies only one dimension of human behavior, with the four fields of mathematics, econometrics, ethics and history intersecting one another. The purpose of this paper is to discuss the two parts of the proposition above, in connection with the controversies surrounding the method and the scope of economics: economics as an applied mathematics and economics as a predictive/empirical science

Business cycle asymmetries in Turkey: an application of Markov-switching autoregressions

This paper examines business cycle characteristics of the Turkish economy in the liberalization (post-1980) period using a Markov-switching Autoregressive (MSAR) model framework. The importance of the model selection process is emphasized in an extensive search for the appropriate MS model. The business cycle properties are found to be very sensitive to the state dimension, the choice of the MS model (classified according to regime-dependent parameters) and the autoregressive lag order. The chosen two-regime MS model suggests four recessionary and five expansionary phases in the post-1980 period. Business cycle phases are found to be asymmetric with the probability of switching from a recession to expansion exceeding the probability of switching from expansion to recession. The paper also provides evidence on the usefulness of a non-linear model as compared with a linear alternative in the context of business cycle research in an emerging economy using various parametric and non-parametric tests. Non-linear and linear models are compared and evaluated using kernel density and conditional expectation estimates by simulating data from respective models.Markov switching AR model, business cycle, asymmetry tests, emerging economy, Turkey,

Design and Development of Solar Flat Mirror and Heat Storage System

Design and development of low cost flat mirror system that produce electricity and heat, and heat storage are described in this paper. Basically, the system is related with Concentrated Solar Power (CSP) technology. Electricity and heat are both produced by water that circulates in system. In this paper, it has been focused on reducing cost, providing wide range use and construct more light system when compared with Solarux CSP. For this purpose, computer aided design programs are used briefly