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Macroeconomic instability, capital accumulation and growth: The case of Turkey 1963-1999

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  • Mustafa Ismihan

    (Department of Economics, Atilim University)

  • Kivilcim Metin-Özcan

    (Department of Economics, Bilkent University)

  • Aysit Tansel

    () (Department of Economics, METU)

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 her capital formation and hence her growth. Furthermore, chronic macroeconomic instability seems to become a serious impediment to the public investment, especially, its infrastructure 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 deteriorates economic growth but it could also reverse the complementarity between public and private investment in the long-run.

Suggested Citation

  • Mustafa Ismihan & Kivilcim Metin-Özcan & Aysit Tansel, 2002. "Macroeconomic instability, capital accumulation and growth: The case of Turkey 1963-1999," ERC Working Papers 0204, ERC - Economic Research Center, Middle East Technical University, revised Apr 2002.
  • Handle: RePEc:met:wpaper:0204
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    Cited by:

    1. 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.
    2. Secil Pacaci Elitok & Al Campbell, 2008. "The Balance of Payments as a Constraint on Turkey’s Growth: 1960-2004," Working Paper Series, Department of Economics, University of Utah 2008_13, University of Utah, Department of Economics.
    3. 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).
    4. repec:blg:journl:v:12:y:2017:i:1:p:85-94 is not listed on IDEAS
    5. Oukhallou, Youssef, 2016. "Analyzing economic growth: what role for public investment?," MPRA Paper 69772, University Library of Munich, Germany.

    More about this item

    Keywords

    Public Investment; Private Investment; Complementarity; Macroeconomic Instability;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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