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Effects Of Growth Volatility On Economic Performance: Empirical Evidence From Turkey

  • M. Hakan Berument

    ()

    (Department of Economics, Bilkent University)

  • N. Nergiz Dincer
  • Zafer Mustafaoglu

This paper examines the relationship between growth and growth volatility for a small open economy with high growth volatility: Turkey. Quarterly data for the period from 1987Q1 to 2007Q3 suggests that growth volatility reduces growth and that this result is robust under different specifications. This paper contributes to the literature by focusing on how growth volatility affects a set of variables that are crucial for growth. Empirical evidence from Turkey suggests that higher growth volatility reduces total factor productivity, investment, and the foreign currency value of local currency (depreciation). Moreover, employment increases, however the evidence for this is not statistically significant.

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Paper provided by Economic Research Forum in its series Working Papers with number 528.

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Length: 15 pages
Date of creation: Jun 2010
Date of revision: Jun 2010
Publication status: Published by The Economic Research Forum (ERF)
Handle: RePEc:erg:wpaper:528
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