Huseyin Kalyoncu

An analytical approach on defense expenditure and economic growth: The case of Turkey and Greece

Purpose – The objective of this study is to examine the relationship between defense expenditure and economic growth for Turkey and Greece in the period of 1956‐2003 using yearly data.Design/methodology/approach – The Engle‐Granger cointegration methodology and Granger causality test are used.Findings – It is found that these two variables are cointegrated for both countries studied. Unidirectional causality running from economic growth to defense expenditure is only found for Turkey.Originality/value – The paper investigates the long‐run relationship between defense expenditure and economic growth by conducting cointegration and causality tests in the context of Turkey and Greece over the period 1956‐2003.

Fiscal policy sustainability: test of intertemporal borrowing constraints

This paper examines sustainability of the fiscal stances of South Korea, Mexico, the Philippines, South Africa and Turkey. Using the usual intertemporal borrowing constraint, we have tested for a long-run relationship between revenue and expenditure plus interest payments. In our empirical analysis of the sustainability of fiscal stances, cointegration approaches have been used. Empirical results suggest that there exists a unique long-run or equilibrium relationship among variables for South Korea and Turkey. The cointegration results suggest that the Turkish and South Korean fiscal stances satisfy the weak sustainability condition. In the case of Mexico, the Philippines and South Africa cointegration results suggest that in these countries the fiscal stance is not sustainable (and violates their intertemporal budget constraints) in the long run.

The Causal Relationship Between Energy Consumption and GDP in Turkey

This paper attempts to investigate the short-run and long-run relationship and causality between energy consumption and economic growth during 1960–2006 period for Turkey. Johansen and Juselius cointegration method and vector error correction model (VECM) have been employed to examine this issue. After finding cointegration among variables, a VECM is estimated and the Granger causality tests were carried out based on a VECM. The results have shown that there is no short-run causality in both energy consumption and GDP models. The results also confirmed that there is unidirectional long-run causality among variables of interest and the direction of long-run causality is running from per capita GDP to per capita energy consumption. As a result, conservation hypothesis which postulates unidirectional causality from economic growth to energy consumption is confirmed for Turkey. Taken together, these empirical findings involve valuable information for policy makers.

New evidence of the validity of purchasing power parity from Turkey

The validity of purchasing power parity (PPP) is examined between Turkey and trading partners, namely USA, Germany, Japan, France, Netherlands and UK. Different unit root test and different base countries are used to determine if the validity of PPP is influenced by the type of test and/or the base country. According to estimation results PPP in Turkey is sensitive to the choice of the base country and can be influenced by the type of test.

Additional evidence of long-run purchasing power parity with black and official exchange rates

In this study, the validity of Purchasing Power Parity (PPP) hypothesis is investigated by using unit root test on official and black market exchange rates for Turkey. When we used the classical unit root test, we found poor evidence for the validity of PPP in classical PP test but no evidence for PPP in the augmented Dickey–Fuller test. However, by using Zivot–Andrews test allowing for one structural break in the series of PPP, we find stronger evidence for both official and black market exchange rates. Our findings illustrate that the unit root test with structural break is powerful than classical ones for long-run PPP.

Measuring the Level of International Capital Mobility for MENA Countries

To achieve sustainable development, it is vitally important to sustain macroeconomic stability, which is closely related to the extent of capital mobility allowed by a country. This paper attempts to measure the level of international capital mobility empirically by estimating the Feldstein-Horioka coefficients employing the panel data for the MENA countries over the period 1963-2007. In empirical analysis, time series properties of the data are examined using recently developed techniques of panel unit root. Having obtained that variables of the model are stationary variables, we use the fixed effect panel model in the analysis of data.The results indicate that capital mobility has always been high in MENA countries but this is particularly obvious for the period 1980-2007, which corresponds to the liberalization period. For the subperiod of 1963-1980, the estimated coefficients are relatively higher, implying the presence of a relatively lower level of capital mobility.

Saving-investment correlations and capital mobility in OECD countries: an error correction analysis

This article studies the time series properties of saving and investment rates for 23 OECD countries using error correction model (ECM) developed by Jansen and Schulze (1996) and Jansen (1996). Applying the ECM to the OECD countries, we find that Denmark, France, Greece, Italy, Japan, Spain, Sweden, Turkey and the United Kingdom indicate low capital mobility.

Unit Root Properties of Energy Consumption and Production in Turkey

In this study, unit root properties of total and sectorial energy production and consumption series of Turkey are investigated. This study is the first to investigate unit root properties of Turkish energy production. The unit root null hypothesis for energy variables are tested by using unit root tests based on LM considering without structural break and with one and two structural breaks. The results of the unit root test without structural break show that the unit root hypothesis is rejected only for consumption of natural gas. The unit root hypothesis is rejected for 15 out of the 33 series by the LS test with one structural break. When two structural breaks are taken into account, 25 out of the 33 series are found to be stationary around a deterministic trend. The production of hydraulic and the consumption of lignite, electricity, petroleum, coal and electricity, total energy and petroleum consumption in Transportation sector are found to be non-stationary, which indicates that the impacts of innovations on these variables will be permanent. The policy implication of the results suggests that the impacts of shocks on energy consumption and production will be temporary and not have a long memory for most of variables. Keywords: unit root, energy production, energy consumption, structural break, Turkey

Determinants of Foreign Direct Investment: An Empirical Analysis for Turkey

(ProQuest: ... denotes formulae omitted.)IntroductionEconomic development of a country depends on utilization of resources for increasing productive capacity. In many developing countries, utilization of resources is rendered impossible by the scarcity of domestic capital. One of these economic problems of developing countries is that they do not have enough national savings to finance their investments. They are in constant need of foreign capital in forms of both direct and indirect investments. Foreign direct investment (FDI) is a process whereby the residents of the source country attain ownership of assets with the intention to control the production, distribution and other activities of a firm in the host country (Khachoo and Khan,2012). Foreign direct investment (FDI) is a way of international loan, by which those countries that have better investment opportunities at the present borrow from those that have capital surplus.FDI can be a crucial instrument to foster economic growth. FDI provides developing countries with the much needed capital for investments and enhances job creation, managerial skills and transfer of technology for less developed countries. Furthermore, FDI encourages technological development and also support the accumulation of physical capital.FDI plays a significant role in the development of international trade, and it helps to establish direct, stable, and long-lasting links between economies. The Organization for Economic Co-operation and Development (OECD) states that; FDI can serve as an important vehicle for local enterprise development, strengthening the competitiveness of both the recipient and investor (Groh and Wich, 2012). For example, Turkey in particular is pursuing further political and monetary integration with Europe. In that case maintaining a government effectiveness that is conducive to foreign investment and increases comparative advantage is integral to its integrationist aspirations.The significance of foreign direct investment (FDI) flows is well documented in literature for both the developing and developed countries. Foreign Direct Investment (FDI) inflows to developing countries have been substantially increasing and, compared to other capital flows, have remained the largest component of net resource flows to developing countries. FDI is a key element in international economic integration. FDI creates direct, stable and long-lasting links between economies. As a definition FDI is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. It encourages the transfer of technology and know-how between countries, and allows the host economy to promote its products more widely in international markets (Todaro, 1994).The role of foreign direct investment in the development of Turkish economy cannot be over emphasized. Foreign direct investment provides capital for investment; it enhances job creation and managerial skills, and possibly technology transfer.We shall present our analysis with a brief history of the Turkish economy. Today, Turkey is one of the most attractive investment destinations for foreign investors. It benefits from a unique strategic location; a young, dynamic and skilled workforce, and a stable political and economic environment. Turkey received foreign investment inflows of only US

Do Private Savings Offset Public Savings in Turkey

18m 33 years ago when it started to host foreign investors. Now, the cumulative value of foreign investments has surged to US