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Money, Inflation and Growth Relationship: The Turkish Case

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  • Cuma BOZKURT

    (Department of Economics, The Faculty of Economics and Administrative Sciences, Gaziantep University, Turkey)

Abstract

There is a significant relation between inflation, which is known as an increase in the general level of prices in the broadest sense of the word, money and growth. While the course of the relationship between money supply and inflation is evident in general terms, an overall tendency related to the relationship between inflation and growth hasn't been clarified. This paper examines money, inflation and growth relationship in Turkey by using cointegration test. For this purpose, 1999.2 2012.2 period is taken and quarterly data of money supply (M2), GDP, velocity of money and deflator are used. According to the results from this paper, money supply and velocity of money is a main determinant of inflation in the long run in Turkey. On the other hand, 1% decreases in income directly reduces inflation by 1%.

Suggested Citation

  • Cuma BOZKURT, 2014. "Money, Inflation and Growth Relationship: The Turkish Case," International Journal of Economics and Financial Issues, Econjournals, vol. 4(2), pages 309-322.
    • Handle: RePEc:eco:journ1:2014-02-8
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    3. Md. Sharif Hossain & Md. Thasinul Abedin, 2016. "Multivariate Dynamic Co-integration and Causality Analysis between Inflation and its Determinants," Journal of Economics and Behavioral Studies, AMH International, vol. 8(5), pages 240-250.
    4. Jaka Sriyana, 2019. "What drives economic growth sustainability? Evidence from Indonesia," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(2), pages 906-918, December.
    5. Safwat Alaa & Salah Ashraf & Elsherif Marwa, 2021. "The Impact of Foreign Direct Investment on the Economic Growth of Egypt (1980-2018)," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 74-85.
    6. Godfrey Akileng & Eric Nzibonera & Micheal Mutegana, 2019. "The Influence of Foreign Exchange Volatility, Interest Rates on the Stock Performance of Uganda Securities Exchange," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 8(2), pages 1-1.
    7. Ditimi Amassoma & Sunday Keji & Emma-Ebere Onyedikachi O., 2017. "The Upshot of Money Supply and Inflation in Nigeria," Valahian Journal of Economic Studies, Sciendo, vol. 8(2), pages 75-90, October.

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    More about this item

    Keywords

    Money; Inflation; Growth; Cointegration Test; Turkey.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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