Interdependency of Business Cycle between Turkey and the Selected Central Asian Countries*

Abstract

The dynamic interdependency among seven countries or economies Turkey, Kazakhstan, Azerbaijan, Russia, China, Iran, and EU is examined through the use of a vector error correction model, directed acyclic graphs DAGs and monthly data of the industrial production index. Overall, the results show that the industrial production of Russia affects the EU and the industrial production of the EU affects Turkey in a contemporaneous time horizon, which implies that two Central Asian countries, such as Azerbaijan and Kazakhstan, have no linkage with either Russia or Turkey in terms of their industrial production for a contemporaneous time horizon. However, all industrial productions of the seven economies are tied together in the long run in one cointegration relationship.

Keywords

• Interdependency, Turkey, Central Asia, International business cycle, directed acyclic graphs

Türkiye ve Orta Asya Ülkelerinin Endüstriyel İş Döngüsündeki Karşılıklı Bağımlılığı

Abstract

Yedi ülke ya da ekonomi Türkiye, Kazakistan, Azerbaycan, Rusya, Çin, İran ve AB arasındaki dinamik Karşılıklı bağımlılık vektör hata düzeltme modeli ve endüstriyel üretim indeksi aylık verileri kullanılarak ölçülmüştür. Genel olarak, sonuçlar eş zaman olarak dilimi içinde Rusya’nın endüstriyel üretiminin AB’yi, AB’nin endüstriyel üretiminin ise Türkiye’yi etkilediğini göstermektedir. Bu durum örneğin Azerbaycan ve Kazakistan gibi iki Orta Asya ülkesinin endüstriyel üretim açısından Rusya ya da Türkiye’yle bağlantısı olmadığı anlamına gelmektedir. Buna rağmen, yedi ekonominin tüm endüstriyel üretimi uzun vadede tek bir eşbütünleşme ilişkisiyle birbirine bağlıdır

Keywords

• Karşılıklı bağımlılık , Türkiye, Orta Asya Ülkeleri, konjonktür dalgaları, asiklik yönlü

References

1. Ahat, Andican. (2013). “Bağımsızlıktan Günümüze Kırgızistan-Türkiye İlişkileri ve Geleceğe İlişkin Düşünceler”, in (ed.) Stratejik Düşünce Enstitüsü, Kırgızistan - Türkiye İlişkilerinin Geleceği, pp.3-9.
2. Akkoyun, H.C., Sen-Dogan, B., & Gunay, M. (2014). “Business cycle synchronization of Turkey with the Eurozone and the United States: What has changed since 2001?” Emerging Markets Finance & Trade, 50(4), pp. 26-41.
3. Akkoyunlu, S., & Kholodilin, K.A. (2008). “A link between workers’remittances and business cycles in Germany and Turkey “ Emerging Markets Finance & Trade, 44(5), pp. 23–40.
4. Aslan, Rıza. (2000). “Türkiye-Avrupa Birliği: Sancılı Gelişen İlişki.” Ankara Üniversitesi SBF Dergisi, vol.55, no.3, pp.9-28.
5. Awokuse, T.O. (2006). “Export-led growth and the Japanese economy: evidence from VAR and directed acyclic graphs”, Applied Economics, 38, pp. 593-602.
6. Aybet, Gülnur. (2006). “Turkey and the EU After the First Year of Negotiations: Reconciling Internal and External Policy Challenges.” Security Dialogue, vol.37, no.4, December, pp.529-549.
7. Aydın, Zülküf. (2012). “ Global crisis, Turkey and the regulation of economic crisis.” Capital & Class, vol. 37, no.1, pp.95 –109.
8. Batmaz, Nihat,. (2004). “Türkiye-Kazakistan Arasındaki Ticari-Ekonomik İlişkiler, Türk Müteşebbislerinin Bu Ülkede Yaptıkları Yatırımların Boyutu ve Karşılaştıkları Sorunlar.” Bilig, no.29, pp.83-104.

9. Batur, Erdi,. (1997). “Türkiye Avrasya İlişkileri.” Amme İdaresi Dergisi, vol.30, no.1, pp 109-127. Bernanke, B.S., 1986. Alternative explanations of the money-income correlation. Carnegie-Rochester Conference Series on Public Policy, 25, pp. 49-99.
10. Berument, M.H., Malatyali, N.K., & Neyapti, B. (2001). “Turkey’s full membership to the European Union.” Russian and East European Finance and Trade, 37(4), pp. 50-60.
11. Bessler, D.A., & Lee, S. (2002). “Money and Prices: U.S. Data 1869-1914 (A study with directed graphs). “ Empirical Economics, vol.27, pp. 427–446.
12. Bessler, D.A., & Loper, N. (2001). “Economic Development: Evidence from directed acyclic graphs. “ The Manchester School, 69(4), pp. 457–476.
13. Bessler, D.A., & Yang, J. (2003). “The structure of interdependence in international stock markets. “ Journal of International Money and Finance, vol.22, pp. 261–287.
14. Cem, Ismail. (2001). Turkey in the New Century, Rustem Publishing.
15. Chen, Chien-Fu. (2009). “Is the international transmission of business cycle fluctuation asymmetric? Evidence from a regime-dependent impluse response function.” International Research Journal of Finance and Economics, 26, pp.134-143.
16. Chickering, D.M.(2003) “Optimal Structure Identification with Greedy Search.”
17. Journal of Machine Learning Research 3, pp.507-554.
18. Crowley, P.M. (2008). “One money, several cycles? Evaluation of European business cycles using model-based cluster analysis.” Bank of Finland Research Discussion Paper 3/ Bank of Filand, Helsinki.
19. Dennis, G.J. (2006). CATS in RATS: Cointegration Analysis of Time Series. Version 2. Evanston, IL: Estima.
20. Dickey, D.A., Hasza, D.P, & Fuller, W.A.. (1984). Testing for unit roots in seasonal time series. Journal of the American Statistical Association, 79(386), pp.355-367.
21. Emerson, Michael. (2014). “Toward a Greater Eurasia: Who, Why, What, and How?” Global Journal of Emerging Market Economies, vol.6, no.1, pp. 35–68.
22. Erden, Lutfi., & Ozkan, I. (2014). “Determinants of international transmission of business cycles to Turkish economy” Economic Modelling, vol.36, pp. 383–390.
23. Erten, Behzat (2013). “Kırgızistan-Türkiye Ticari ve Ekonomik İlişkileri”, in (ed.) Stratejik Düşünce Enstitüsü, Kırgızistan - Türkiye İlişkilerinin Geleceği, pp. 24-34.
24. Flood, R.P., & Rose, A. (2010). “Inflation targeting and business cycle synchronization “ Jounal of International Money and Finance, 29(4), pp. 704–727.
25. Frankel, J.A., & Rose, A.K. (1998). “The endogeneity of the optimum currency area criteria.”The Economic Journal, 108(449), pp.1009-1025.
26. Fuller, W. (1976). Introduction to Statistical Time Series. New York, NY: John Wiley and Sons.
27. Gomez, D.M., Ortega, G., & Torgler, B.(2012). “Synchronization and diversity in business cycles. A network approach applied to the European union” QUT school of Economics and Finance, working Paper 277.
28. Gouveia, Sofia. (2014). “Business cycle correlation between the Euro area and the Balkan countries.” International Journal of Economic Sciences and Applied Research, 7(1), pp.33-49. Habibi, Nader, May. (2012). “Turkey and Iran: Growing Economic Relations Despite Western Sanctions.” Middle East Brief, no.62.
29. Hansen, H., & Juselius, K.. (1995). CATS in RATS: Cointegration Analysis of Time Series. Evanston, IL: Estima.
30. Heckerman, D. (1996). “A Tutorial on Learning Bayesian Networks.” Redmond, WA: Microsoft Research, Technical Report MSR-TR-95-06.
31. Hoover, K.D. (2005). Automatic inference of the contemporaneous causal order of a system of equations. Econometric Theory, 21(1), pp.69-77.
32. Imbs, J. (2004). “Trade, Finance, Specialization, and Synchronization” The Review of Economics and Statistics, 86(3), pp. 723–734.
33. Inklaar, R., Jong-A-Pin, R. & de Hann, J. (2008). “Trade and business cycle synchronization in OECD countries-A re-examination” European Economic Review, 52(2), pp. 646-666.
34. Johansen, S. (1991). Estimation and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models. Econometrica, 59(6), pp.1551-1580.
35. Johansen, S.. (1992). Determination of cointegration rank in the presence of a linear trend. Oxford Bulletin of Economics and Statistics, 54(3), pp.383-397.
36. Juselius, K.. (2006). The Cointegrated VAR Model. Oxford: Oxford University Press.
37. Karamyan, Aram, Tilak Ishtiaq and Rizwan Naseer, May (2012). “Turkish Growing Influence in Central Asian Countires in Post-Cold War Era.” Berkeley Journal of Social Sciences, vol.2, issue 5.
38. Kaya, Ahmet. (2013). “ Türkiye - Kırgızistan Ekonomi - Ticaret İlişkileri”, in (ed.) Stratejik Düşünce Enstitüsü, Kırgızistan - Türkiye İlişkilerinin Geleceği, pp. 10-16.
39. Kazak, Metin. (2010). “Türkiye ile Ticari ve Ekonomik iliskiler”, AP Uluslararası Ticaret Komitesi Session Document.
40. Kose, M.A., Prasad, E.S. & Terrones, M.(2003). “How does globalization affect the synchronization of business cycle?” American Economic Review, 93(2), pp. 57-62.
41. Kramer, Heinz, March-May. (1996). “Will Central Asia Become Turkey’s Sphere of Influence.” Perceptions, vol.1.
42. Li, G., Song, H., & Witt, S.F. (2005). Recent developments in econometric modeling and forecasting. Journal of Travel Research, 44(1), pp.82-99.
43. Mackinnon, J.G. (1996). Numerical distribution functions for unit root and cointegration tests. Journal of Applied Econometrics, 11, pp.601-618.
44. Matesanz, D., & Ortega, G. J. (2016). “On business cycles synchronization in Europe: A note on network analysis “ Physica A, 462, pp. 287–296.
45. Morozov, Viatcheslav and Bahar Rumelili. (2011). “The External Constitution of European Identity: Russia and Turkey as Europe-makers.” Cooperation and Conflict, vol.47, no.1, pp. 28 –48.
46. MÜSİAD. (2013). Batı Sonrası Dünya Doğru Türk Dış Politikası, Istanbul.
47. Mutlu, Gülay. (2014). “Çin’in İpek Yolu Politikası ve Orta Asya’ya Etkisi”, Eko Avrasya, no.26. Öniş, Ziya. (2008). “Turkey-EU Relations: Beyond the Current Stalemate.” Insight Turkey, vol.10, no.4, pp. 35-50.
48. Osborn, D.R., Perez, P.J., & Sensier, M.(2005). “Business cycle linkages for the G7 countries: does the US lead the world?” Centre for Growth and Business Cycle Research, University of Manchester Discussion Paper 050.
49. Park, H., Mjelde, J.W., & Bessler, D.A.(2006). “Price dynamics among U.S. electricity spot markets.” Energy Economics, 28, pp. 81-101.
50. Park, H., Mjelde, J.W., & Bessler, D.A.(2008). “Price interactions and discovery among natural gas spot markets in North America.” Energy Policy, 36(1), pp. 290-320.
51. Pearl, J. (1995). “Causal diagrams for empirical research.” Biometrika, 82, pp. 669-710.
52. Pearl, J. (2000). Causality Models, Reasoning, and Inference. Cambridge, Massachusetts: Cambridge Press.
53. Samuelson, P.A., 1971. Stochastic speculative price. Proceedings of the National Academy of Sciences, 68(2), pp. 335-337.
54. Sayek, S., & Selover, D.D. (2002). “International interdependence and business cycle transmission between Turkey and the European Union.” Southern Economic Journal, 69(2), pp.206-238.
55. Selçuk Esenbel & Altay Atlı, September 30. (2013). “Turkey’s Changing Foreign Policy Stance: Getting Closer to Asia?”, Middle East Institute.
56. Sims, C.(1980). Macroeconomics and reality. Econometrica, 48(1), pp. 1-48.
57. Solak, Fahri. (2003). “Türkiye-Orta Asya Cumhuriyetleri Dış Ticaret İlişkilerinin Gelişimi.” T.C. Marmara Üniversitesi İ.İ.B.F. Dergisi, vol.18, no.1, pp.69-96.
58. Spirtes, P., Glymour, C., & Scheines, R.(2000). Causation, prediction, and search. Cambridge, Massachusetts: MIT Press.
59. Swanson, N.R., & Granger, C.W.J.(1997). Impulse response functions based on a causal approach to residual orthogonalization in vector autoregressions. Journal of the American Statistical Association, 92(437), pp.357-367.
60. Taşağıl, Ahmet. (2010). “Türkiye’nin Orta Asya Türk Cumhuriyetleri ile ilişkilerinin Dünü, Bugünü ve Yarini”, Mimar Sinan Üniversitesi, Fen-Edebiyat Fakültesi, Tarih Bölümü. Tastan, H., & Yildirim, N. (2008). “Business cycle asymmetrics in Turkey: an application of Markow-switching autoregressions.” International Economics Journal, 22, pp.315-333.
61. TC Ekonomik İşler Genel Müdürlüğü, TC Dışişleri Bakanlığı,. (2015). “Türkiye’nin Dış Ekonomik İlişkileri”. http://www.mfa.gov.tr/turkiye_nin-dis-ekonomik-iliskileri.tr.mfa TETRAD IV Manual. (2004). Available at http://www.phil.cmu.edu/projects/tetrad/ tetrad4.html. Accessed January 2015.
62. Tiao, G. & Box, G.(1981). Modeling Multiple time series with applications. Journal of the American Statistical Association, 76(376), pp.802-816.
63. Wang, Z., & Bessler, D.A.(2005). A Monte Carlo study on the selection of cointegrating rank using information criteria. Econometric Theory, 21(3), pp.593-620.
64. Xi, N., Muneepeerakul, R., Azaele, S., & Wang, Y. (2014). “Maximum entropy model for business cycle synchronization.” Physica A, 413, pp. 189-194.
65. Yardımcıoğlu, Mahmut, Hilal Kocamaz and Gamze Şerbetçi, 1-2 Ekim. (2012). “Türkiye’de Dış Ticaret ve Ticari İlişkiler.” II.Bölgesel Sorunlar ve Türkiye Sempozyumu, pp.339-346.
66. Zhussipbek, Galym, August. (2013). “What Defines Turkey and Central Asia Relations”
67. The Washington Review of Turkish & Eurasian Affairs. http://www.thewashingtonreview.org/articles/what-defines-turkey-and-central-asia-relations.html