TESTING THE IMPACT OF REFUGEE IMMIGRATION ON INFLATION SUB-GROUPS IN THE WORLD’S LEADING REFUGEE HOST COUNTRY: FOURIER CAUSALITY APPROACH

Abstract

This study investigates the causal relationship between the refugee population in Türkiye and sub-categories of inflation. Employing econometric analysis on data spanning the period from 2003 to 2024, the research first utilizes the Fourier ADF unit root test to determine the stationarity properties of the variables. Subsequently, the direction of causality is examined through the application of both the conventional Toda-Yamamoto test (1995) and the more recently developed Fourier Toda-Yamamoto test (Nazlioglu et al. 2016), which accommodates potential structural breaks within the time series. The econometric analysis demonstrated a causal nexus originating from the refugee population and impacting inflationary pressures within specific sub-indices: food, alcoholic beverages, clothing, furnishings, healthcare, education, and the hotel/restaurants. The results obtained from the standard Toda-Yamamoto test and the Fourier Toda-Yamamoto test exhibited substantial consistency, with the primary discrepancy arising in the context of housing inflation. Specifically, the Fourier Toda-Yamamoto methodology identified a statistically significant causal flow from the refugee population to housing inflation. Overall evaluation of the results reveals a convergence between the findings of the Fourier Toda-Yamamoto causality test and the standard Toda-Yamamoto causality test. This consistency suggests that the presence of structural breaks does not fundamentally alter the general equilibrium relationships identified. The findings obtained underscore the critical need for the formulation of targeted policies that explicitly consider the occupational profiles, age distribution, and educational attainment of the refugee population to effectively mitigate inflationary pressures within the identified sub-sectors.

Keywords

• Refugee immigration
• inflation
• causality

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