What are the factors that drive economic growth? evidence from Turkey

Baddou, Mehdi and Masih, Mansur (2018): What are the factors that drive economic growth? evidence from Turkey.

Abstract

The paper focuses on the factors determining the economic growth. Turkey is used as a case study. Because of the regional tensions in the Turkish region, we want to help the policy makers know what factors of economic growth they should focus on to promote growth. The standard time series techniques are used for the analysis. The findings tend to indicate that the GDP is the most endogenous (i.e., dependent) variable and the inflation rate is the most exogenous (i.e., independent) variable. Based on the generalized variance decompositions, it appears that the Granger-causal chain is driven mainly by the inflation rate leading to gross capital formation, Government consumption, trade openness and GDP. Our findings recommend that the Turkish policy makers should focus on the above factors to enhance economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic Growth, Trade Openness, Inflation, Granger-Causality, Turkey
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C58 - Financial Econometrics; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development

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