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Long Run Profit Maximization in the Turkish Manufacturing Sector

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Author Info

  • Avni Onder Hanedar

    ()
    (Department of Economics, Faculty of Business, Dokuz Eylül University)

  • Elmas Yaldiz

    ()
    (Department of Economics, Izmir University of Economics)

  • Ozgul Bilici

    ()
    (Department of Economics, Izmir University of Economics)

  • Onur Akkaya
Registered author(s):

    Abstract

    The purpose of this research is to investigate whether the long-run relationship implied by profit maximization is valid for the Turkish manufacturing industry for the period of 1950-2001. During this period, the Turkish economy has experienced important policy changes, for example the implementation of liberalization policies after the 1980s. Thus, the possible effects of economic policy implementations over the profit maximization in the Turkish manufacturing sector will also be studied by using advanced time series techniques such as the Zivot and Andrews (1992) unit root test and the Gregory and Hansen (1996) co-integration test. The results of the study show that rationalization mechanism does not appear to work in Turkey. Because most of the previous studies on this issue are concentrated in developed countries and also, there has been little research into the Turkish manufacturing sector, the contribution of this study is important.

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    File URL: http://www.deu.edu.tr/UploadedFiles/Birimler/12741/06_02.pdf
    File Function: First version, 2006
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    Bibliographic Info

    Paper provided by Dokuz Eylül University, Faculty of Business, Department of Economics in its series Discussion Paper Series with number 06/02.

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    Length: 13 pages
    Date of creation: 30 Nov 2006
    Date of revision: 30 Nov 2006
    Handle: RePEc:deu:dpaper:0602

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    Web page: http://www.deu.edu.tr/DEUWeb/Icerik/Icerik.php?KOD=442
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    Related research

    Keywords: Long run equilibrium; co-integration; elasticity of substitution; structural breaks;

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    1. Granger, Clive W J, 1986. "Developments in the Study of Cointegrated Economic Variables," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 213-28, August.
    2. Perron, P., 1990. "Further Evidence On Breaking Trend Functions In Macroeconomics Variables," Papers 350, Princeton, Department of Economics - Econometric Research Program.
    3. Perron, P, 1988. "The Great Crash, The Oil Price Shock And The Unit Root Hypothesis," Papers 338, Princeton, Department of Economics - Econometric Research Program.
    4. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    5. Pål Boug, 1999. "The Demand for Labour and the Lucas Critique. Evidence from Norwegian Manufacturing," Discussion Papers 256, Research Department of Statistics Norway.
    6. Peter C.B. Phillips & Pierre Perron, 1986. "Testing for a Unit Root in Time Series Regression," Cowles Foundation Discussion Papers 795R, Cowles Foundation for Research in Economics, Yale University, revised Sep 1987.
    7. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
    8. Allan w. Gregory & Bruce E. Hansen, 1992. "residual-Based Tests for Cointegration in Models with Regime Shifts," Working Papers 862, Queen's University, Department of Economics.
    9. R. MacDonald & P.D. Murphy, 1992. "Employment in Manufacturing: A Long-run Relationship and Short-run Dynamics," Journal of Economic Studies, Emerald Group Publishing, vol. 19(5), pages 3-18, October.
    10. Jenkinson, T J, 1986. "Testing Neo-Classical Theories of Labour Demand: An Application of Cointegration Techniques," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 241-51, August.
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