Measuring the impact of some macroeconomic variables on Turkey's economic growth for the period 1985-2022

Abstract

This research, through its practical aspect, aims to measure the impact of certain macroeconomic variables, namely: broad money supply, current account balance, foreign direct investment, and gross fixed capital formation, on economic growth, which is considered the dependent variable for the period 1985-2022. The study is based on the hypothesis that independent variables vary in terms of nature and degree of their impact on the dependent variable. Additionally, it is hypothesized that there is a cointegration relationship among the research variables in both the short and long terms.

To achieve the research objectives and confirm its hypotheses, the Autoregressive Distributed Lag (ARDL) methodology was employed. The estimation results led to several conclusions, including confirmation of the existence of a cointegration relationship among the model variables in both the short and long terms. All independent variables demonstrated statistical significance, indicating their relative strength in influencing the dependent variable. It was found that foreign direct investment had the most significant impact, followed by the current account balance in terms of relative importance. This highlights the vital role of both foreign investment and current account balance in enhancing Turkish economic growth, as they are considered key indicators of local economic sustainability and stability.

In continuation of the research context, a set of recommendations has been presented that aims to provide solutions to effectively capitalize on the positive aspects of the influences of independent variables while minimizing negative effects.