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Analysis of Wavelet Coherence: Service Sector Index and Economic Growth in an Emerging Market

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  • Ayhan Orhan

    (Economics Department, Faculty of Economic and Administrative Science, Kocaeli University, Kocaeli 41380, Turkey)

  • Dervis Kirikkaleli

    (Department of Banking and Finance, Faculty of Economic and Administrative Science, European University of Lefke, Lefke Northern Cyprus, TR-10 Mersin, Turkey)

  • Fatih Ayhan

    (Gonen Vocation School, Bandırma Onyedi Eylül University, Gönen, Balıkesir 10900, Turkey)

Abstract

The present study aims to shed some light on the causal link between the Service Sector Index in the Turkish stock market and economic growth using a wavelet coherence approach. Thus, the present study determines whether the Service Sector Index leads to economic growth in Turkey and/or vice versa. Based on our aim, we use the wavelet coherence approach, which allows us to capture long-run and short-run causal linkages between the Service Sector Index and economic growth in Turkey, since the approach combines both time domain causality and frequency domain causality tests. The findings from wavelet coherence reveal that there is one-way causality running from the Service Sector Index to economic growth in Turkey at different frequencies and different periods between 1997 and 2017.

Suggested Citation

  • Ayhan Orhan & Dervis Kirikkaleli & Fatih Ayhan, 2019. "Analysis of Wavelet Coherence: Service Sector Index and Economic Growth in an Emerging Market," Sustainability, MDPI, vol. 11(23), pages 1-12, November.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:23:p:6684-:d:290945
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    Cited by:

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    3. DerviÅŸ Kirikkaleli & Mustafa Tevfik Kartal & Tomiwa Sunday Adebayo, 2022. "Time And Frequency Dependency Of Foreign Exchange Rates And Country Risk:Evidence From Turkey," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(1), pages 37-54, June.
    4. Ghazani, Majid Mirzaee & Khosravi, Reza & Caporin, Massimiliano, 2023. "Analyzing interconnection among selected commodities in the 2008 global financial crisis and the COVID-19 pandemic," Resources Policy, Elsevier, vol. 80(C).
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    6. Xingxing He & Korhan K. Gokmenoglu & Dervis Kirikkaleli & Syed Kumail Abbas Rizvi, 2023. "Co‐movement of foreign exchange rate returns and stock market returns in an emerging market: Evidence from the wavelet coherence approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1994-2005, April.

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