Linking economic growth and international trade taxes in Turkey: A Fourier approach

Abstract

Revenues from international trade and transactions are crucial for the economic growth and macroeconomic activity of a country. For that reason, taxes from international trade and transactions are used to proxy revenues. Moreover, industrial production index is considered to be proxied for the economic growth. In this study, these variables are used monthly for the period of January 2006 and February 2022 for Turkey. First, different kinds of Fourier based unit root tests including flexibility and fractionality have been used to analyze the data structure. Then, linear VAR and Fourier VAR models have been estimated to reach and analyze the differences of the results of impulse responses between linear and trigonometric models. Finally, linear and Fourier term included Granger Causality tests have been used to question if there would be a difference or not. When the estimations and tests having Fourier structure have been established, the tests considering it have given more different results than linear models. Briefly, it has been shown that policy makers should shift their decisions to an alternative direction.