IDEAS home Printed from https://ideas.repec.org/a/vrs/ekonom/v96y2017i1p74-92n5.html

Some searches may not work properly. We apologize for the inconvenience.

   My bibliography  Save this article

The Influence of Consumption and Investment on Unemployment in Turkey: A Svar Approach

Author

Listed:
  • Yıldırım Mustafa Ozan

    (Department of Economics, Faculty of Economics and Administrative Science, Pamukkale University,Denizli, Turkey)

  • Yıldırım Ahmet Eren

    (Yıldırım Hitit University,Ankara, Turkey)

Abstract

The aim of this paper is to examine the dynamic relationship between consumption, investment and unemployment in Turkey using structural VAR (SVAR) models. The four different SVAR models are estimated by using quarterly observations of dynamic and contemporaneous relations for the mentioned macroeconomic variables, covering the 2005-2016 period for the Turkish economy. Four different unemployment rates are used in the study to represent the unemployment rate in the Turkish economy, which are overall, young (15-24 age), male and female unemployment rates. Impulse response functions and variance decomposition results obtained from the study show that consumption shocks have a significant impact on both the unemployment rate and the investments, in support of the basic hypothesis that is argued in the study. Investment shocks also have a similar effect on unemployment rates and positive investment shocks have reduced unemployment rates. Moreover, another result obtained in all four models suggests that a shock in consumption increases investment through the accelerator effect.

Suggested Citation

  • Yıldırım Mustafa Ozan & Yıldırım Ahmet Eren, 2017. "The Influence of Consumption and Investment on Unemployment in Turkey: A Svar Approach," Ekonomika (Economics), Sciendo, vol. 96(1), pages 74-92, January.
    • Handle: RePEc:vrs:ekonom:v:96:y:2017:i:1:p:74-92:n:5
    DOI: 10.15388/ekon.2017.1.10665
    as

    Download full text from publisher

    File URL: https://doi.org/10.15388/ekon.2017.1.10665
    Download Restriction: no
    File URL: https://libkey.io/10.15388/ekon.2017.1.10665?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mehmet Ivrendi & Douglas K. Pearce, 2014. "Asset prices and expected monetary policy: evidence from daily data," Applied Economics, Taylor & Francis Journals, vol. 46(9), pages 985-995, March.
    2. Arestis, Philip & Mariscal, Iris Biefang-Frisancho, 1998. "Capital shortages and asymmetries in UK unemployment," Structural Change and Economic Dynamics, Elsevier, vol. 9(2), pages 189-204, June.
    3. M. Hakan Berument & Nukhet Dogan & Aysit Tansel, 2009. "Macroeconomic Policy and Unemployment by Economic Activity: Evidence from Turkey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 45(3), pages 21-34, May.
    4. Constantinos Alexiou & Christos Pitelis, 2003. "On capital shortages and European unemployment: a panel data investigation," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 25(4), pages 613-640.
    5. Herbertsson, Tryggvi Thor & Zoega, Gylfi, 2002. "The Modigliani 'puzzle'," Economics Letters, Elsevier, vol. 76(3), pages 437-442, August.
    6. Hakan Berument & Nukhet Dogan & Aysit Tansel, 2004. "Economic Performance and Unemployment: Evidence from an Emerging Economy - Turkey," Working Papers 0409, Economic Research Forum, revised 01 Aug 2004.
    7. Dogrul, H. Günsel & Soytas, Ugur, 2010. "Relationship between oil prices, interest rate, and unemployment: Evidence from an emerging market," Energy Economics, Elsevier, vol. 32(6), pages 1523-1528, November.
    8. Pascal Michaillat & Emmanuel Saez, 2015. "Aggregate Demand, Idle Time, and Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(2), pages 507-569.
    9. Roberto Bande & Marika Karanassou, 2014. "Spanish Regional Unemployment Revisited: The Role of Capital Accumulation," Regional Studies, Taylor & Francis Journals, vol. 48(11), pages 1863-1883, November.
    10. Marika Karanassou & Dennis J. Snower, 2004. "Unemployment Invariance," German Economic Review, Verein für Socialpolitik, vol. 5(3), pages 297-317, August.
    11. Philip Arestis & Michelle Baddeley & Malcolm Sawyer, 2007. "The Relationship Between Capital Stock, Unemployment And Wages In Nine Emu Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 59(2), pages 125-148, April.
    12. Jim Malley & Thomas Moutos, 2001. "Capital Accumulation and Unemployment: A Tale of Two “Continents”," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 79-99, March.
    13. Abiad (ADB), Abdul & Furceri (IMF and University of Palermo), Davide & Topalova (IMF), Petia, 2016. "The macroeconomic effects of public investment: Evidence from advanced economies," Journal of Macroeconomics, Elsevier, vol. 50(C), pages 224-240.
    14. Rowthorn, Robert, 1995. "Capital Formation and Unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 11(1), pages 26-39, Spring.
    15. Engelbert Stockhammer, 2004. "Explaining European Unemployment: Testing the NAIRU Hypothesis and a Keynesian Approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(1), pages 1-26.
    16. Marika Karanassou & Hector Sala & Pablo F. Salvador, 2008. "Capital accumulation and unemployment: new insights on the Nordic experience," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(6), pages 977-1001, November.
    17. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, January.
    18. Laurence Ball, 1999. "Aggregate demand and Long-Run Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 189-252.
    19. Roberto BANDE & Dolores RIVEIRO, 2013. "The Consumption-Investment-Unemployment Relationship In Spain: An Analysis With Regional Data," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 4(1), pages 5-24.
    20. Malcolm Sawyer, 2002. "The NAIRU, Aggregate Demand and Investment," Metroeconomica, Wiley Blackwell, vol. 53(1), pages 66-94, February.
    21. Atif R. Mian & Amir Sufi, 2012. "What explains high unemployment? The aggregate demand channel," NBER Working Papers 17830, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marika Karanassou & Hector Sala & Dennis J. Snower, 2010. "Phillips Curves And Unemployment Dynamics: A Critique And A Holistic Perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 1-51, February.
    2. Roberto Bande & Marika Karanassou, 2014. "Spanish Regional Unemployment Revisited: The Role of Capital Accumulation," Regional Studies, Taylor & Francis Journals, vol. 48(11), pages 1863-1883, November.
    3. Philip Arestis & Michelle Baddeley & Malcolm Sawyer, 2007. "The Relationship Between Capital Stock, Unemployment And Wages In Nine Emu Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 59(2), pages 125-148, April.
    4. Roberto Bande Ramudo & Manuel Fernández Grela & Mª Dolores Riveiro García, 2011. "Consumption, Saving, Investment, and Unemployment. SVAR Tests of the Effects of Changes in the Consumption-Saving Pattern," Documentos de trabajo - Analise Economica 0045, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
    5. Engelbert Stockhammer & Alexander Guschanski & Karsten Köhler, 2014. "Unemployment, capital accumulation and labour market institutions in the Great Recession," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(2), pages 182-194, September.
    6. David R. Howell, 2010. "Institutions, Aggregate Demand and Cross-Country Employment Performance: Alternative Theoretical Perspectives and the Evidence," Working Papers wp228, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Engelbert Stockhammer & Erik Klär, 2011. "Capital accumulation, labour market institutions and unemployment in the medium run," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(2), pages 437-457.
    8. Engelbert Stockhammer & Simon Sturn, 2012. "The impact of monetary policy on unemployment hysteresis," Applied Economics, Taylor & Francis Journals, vol. 44(21), pages 2743-2756, July.
    9. Chella, Namapsa & Phiri, Andrew, 2017. "Long-run cointegration between foreign direct investment, direct investment and unemployment in South Africa," MPRA Paper 82371, University Library of Munich, Germany.
    10. Sturn, Simon & Epstein, Gerald, 2021. "How much should we trust five-year averaging to purge business cycle effects? A reassessment of the finance-growth and capital accumulation-unemployment nexus," Economic Modelling, Elsevier, vol. 96(C), pages 242-256.
    11. Eckhard Hein & Engelbert Stockhammer, 2010. "Macroeconomic Policy Mix, Employment and Inflation in a Post-Keynesian Alternative to the New Consensus Model," Review of Political Economy, Taylor & Francis Journals, vol. 22(3), pages 317-354.
    12. Marika Karanassou & Hector Sala, 2010. "Labour Market Dynamics in Australia: What Drives Unemployment?," The Economic Record, The Economic Society of Australia, vol. 86(273), pages 185-209, June.
    13. Engelbert Stockhammer & Rob Calvert Jump, 2022. "An Estimation of Unemployment Hysteresis," Working Papers PKWP2221, Post Keynesian Economics Society (PKES).
    14. Engelbert Stockhammer, 2011. "Wage norms, capital accumulation, and unemployment: a post-Keynesian view," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 27(2), pages 295-311.
    15. Roberto Bande & Marika Karanassou, 2011. "The NRU and the Evolution of Regional Disparities in Spanish Unemployment," Documentos de trabajo - Analise Economica 0043, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
    16. Antonio Rodriguez-Gil, 2018. "Hysteresis and labour market institutions. Evidence from the UK and the Netherlands," Empirical Economics, Springer, vol. 55(4), pages 1985-2025, December.
    17. Roberto Bande-Ramudo & Manuel Fernandez-Grela & Dolores Riveiro-Garcia, 2014. "Consumption, investment and unemployment: SVAR tests of the effects of changes in the consumption-saving pattern," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-7, December.
    18. Zwickl, Klara & Disslbacher, Franziska & Stagl, Sigrid, 2016. "Work-sharing for a sustainable economy," Ecological Economics, Elsevier, vol. 121(C), pages 246-253.
    19. Liu, De-chih, 2021. "The Unemployment Invariance Hypothesis: Does the Gender Matter?," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 62(2), pages 178-199, December.
    20. Diogo Martins & Bruno Damásio, 2020. "One Troika fits all? Job crash, pro-market structural reform and austerity-driven therapy in Portugal," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(3), pages 495-521, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:ekonom:v:96:y:2017:i:1:p:74-92:n:5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.