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Macroeconomic Instability, Capital Accumulation and Growth : The Case of Turkey 1963-1999

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  • Mustafa Ismihan
  • Aysit Tansel
  • Kivilcim Metin-Ozcan

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 the capital formation and hence growth. Furthermore, chronic macroeconomic instability seems to become a serious impediment to the public investment, especially its infrastructural 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 hinders economic growth but it could also reverse the complementarity between public and private investment in the long-run.
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  • Mustafa Ismihan & Aysit Tansel & Kivilcim Metin-Ozcan, 2002. "Macroeconomic Instability, Capital Accumulation and Growth : The Case of Turkey 1963-1999," Working Papers 0205, Department of Economics, Bilkent University.
    • Handle: RePEc:bil:wpaper:0205
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    Cited by:

    1. Secil Pacaci Elitok & Al Campbell, 2008. "The Balance of Payments as a Constraint on Turkeys Growth: 1960-2004," Working Paper Series, Department of Economics, University of Utah 2008_13, University of Utah, Department of Economics.
    2. ISLAM Mohammad Saiful & PATTAK Dulal Chandra, 2017. "The Dimensions Affecting Investment Resulting Stabilized Economic Growth In Bangladesh: Perception Analysis Of Investors And Bankers," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(1), pages 85-94, April.
    3. Oukhallou, Youssef, 2016. "Analyzing economic growth: what role for public investment?," MPRA Paper 69772, University Library of Munich, Germany.
    4. Göktaylar, Yavuz, 2011. "The rise of independent administrative authorities in Turkey: A close look on sources, successes and challenges of this new institutional transformation," 22nd European Regional ITS Conference, Budapest 2011: Innovative ICT Applications - Emerging Regulatory, Economic and Policy Issues 52154, International Telecommunications Society (ITS).
    5. Demir, Firat, 2006. "Volatility of short term capital flows and socio-political instability in Argentina, Mexico and Turkey," MPRA Paper 1943, University Library of Munich, Germany.
    6. Unal Zenginobuz & Sumru Altug, 2009. "What has been the Role of Investment in Turkey's Growth Performance?," Working Papers 2009/02, Bogazici University, Department of Economics.

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    More about this item

    Keywords

    Public investment; Private investment; Complementarity; Macroeconomic Instability;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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