Testing for Symmetric and Asymmetric Causality between Inflation, Savings and Economic Growth in Turkey

Abstract

In this study, the relationship between inflation, saving and economic growth have been analyzed with autoregressive distributed lag model (ARDL), symmetric and asymmetric causality tests for Turkey using annual data for the period from 1983 to 2015. The result of the ARDL and error correction model shows that when the inflation rate increases by 1%, the economic growth decreases by 0.07% in the short run and 0.23% in the long run. The increase in saving also affects economic growth positively in the short-long run. According to the results of Hatemi-J (2012) asymmetric causality test, unidirectional causality is running from the negative shocks of savings and inflation to the positive shocks of economic growth and from the negative shocks of inflation to the positive shocks of savings.