Income Inequality and FDI in Turkey: FM-OLS (Phillips-Hansen) Estimation and ARDL Approach to Cointegration
AbstractThis paper examines the long-run impact of foreign direct investment (FDI) on and the other determinants of income inequality in Turkey. Using a linear income inequality model, we apply the (ARDL) approach to cointegration which is more appropriate for estimation in small sample studies. The long-run results are also estimated by using the fully modified ordinary least squares (FMOLS) method. These methodologies, while proven to produce reliable estimates in small sample sizes, provide a check for the robustness of results. The data span for the study is from 1990 to 2006. The empirical results indicate the existence of a cointegration relationship among the variables. The results also point to a positive impact of FDI on income inequality which is consistent with other past studies. The positive impact of FDI growth rate on income inequality is shown to be significant in the short-run but not in the long-run.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 48765.
Date of creation: 21 Jan 2009
Date of revision:
Income inequality; foreign direct investment; FMOLS estimation; ARDL estimation; Turkey.;
Find related papers by JEL classification:
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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