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When Stability Matters: Long-Run and Dynamic Effects of Public and Private Fixed-Capital Investments on Economic Growth in Turkey

Author

Listed:
  • Asli Guler
  • Ibrahim Al

Abstract

This study investigates the cointegration and causality relationships between public and private fixed capital investments and economic growth in Turkey during the 1988-2023 period, taking into account structural breaks in the cointegration relationship among the variables and allowing for time-varying causal relationships. The findings from the sharp-break Augmented ARDL approach confirm a long-term relationship between public and private fixed capital investments and economic growth. On the other hand, the positive impact of private fixed capital investments on growth tends to be more pronounced and permanent compared to public investments. The findings from the time-varying causality technique reveal that the causal relationships between public and private fixed capital investments and economic growth tend to fluctuate over time. Accordingly, the causal effect of public investments on growth is more pronounced in periods of macroeconomic stability. Besides, the causality from private investments to growth is more stable and persistent.

Suggested Citation

  • Asli Guler & Ibrahim Al, 2026. "When Stability Matters: Long-Run and Dynamic Effects of Public and Private Fixed-Capital Investments on Economic Growth in Turkey," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 3-26.
    • Handle: RePEc:bas:econst:y:2026:i:2:p:3-26
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    File URL: http://archive.econ-studies.iki.bas.bg/2026/2026_02/2026_02_01.pdf
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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - 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; State Space Models

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