A Time Series Analysis of the Determinants of Private Savings in Turkey

Abstract

Private savings rate declined from an average of 23 percent of gross domestic income in the 1990s to an average of 16 percent in the 2000s in Turkey. There is a negative relationship between private and public savings rate especially for the period of 1985-1993 and 20002010 leading to Ricardian equivalence that the increase in public savings crowds out private savings, which results in unchanged domestic savings. Turkey also has a decreasing trend in domestic savings, hence there should be some other important determinants leading to decreasing private savings. The aim of this paper is to analyze the determinants of private savings in Turkey to evaluate which determinants have the outmost importance for private savings and to advise policy changes in order to increase private savings to have sustainable growth in Turkey. IV/GMM Time Series Estimation is carried out for the period between 1985 and 2010 for Turkey

Keywords

• IV/GMM, Private Saving, Shadow Economy, Sustainable Growth, Turkey

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