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Macroeconomic instability, capital accumulation and growth: The case of Turkey 1963-1999

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Author Info
Mustafa Ismihan (Department of Economics, Atilim University)
Kivilcim Metin-Özcan (Department of Economics, Bilkent University)
Aysit Tansel () (Department of Economics, METU)

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Abstract

This study investigates the empirical relationships between macroeconomic instability, capital accumulation and growth in Turkey over the period 1963-1999. We use recent time series econometric techniques, such as cointegration and impulse response analysis, to analyze empirical relationships between the variables of interest. The results of this paper suggest that the chronic and increasing macroeconomic instability of the Turkish economy has seriously affected her capital formation and hence her growth. Furthermore, chronic macroeconomic instability seems to become a serious impediment to the public investment, especially, its infrastructure component, and shattered or, even reversed the complementarity between public and private investment in the long-run. Therefore, Turkish experience has shown that macroeconomic instability not only deteriorates economic growth but it could also reverse the complementarity between public and private investment in the long-run.

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File URL: http://www.erc.metu.edu.tr/menu/series02/0204.pdf
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Publisher Info
Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number 0204.

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Date of creation: Apr 2002
Date of revision: Apr 2002
Handle: RePEc:met:wpaper:0204

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Web page: http://www.erc.metu.edu.tr
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Related research
Keywords: Public Investment Private Investment Complementarity Macroeconomic Instability

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Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization
C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Demir, Firat, 2007. "Volatility of short term capital flows and socio-political instability in developing countries: A review," MPRA Paper 1943, University Library of Munich, Germany, revised Jan 2008. [Downloadable!]
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