THE DYNAMICS OF SAVING, INVESTMENT AND GROWTH UNDER THE DARK SHADOW OF INFLATION IN TURKEY: A TODA-YAMAMOTO ANALYSIS

Year 2024, Volume: 4 Issue: 1, 105 - 124, 30.06.2024

Gülgün Çiğdem

Abstract

This paper examines the complex relationships between inflation, Gross Domestic Product (GDP), investment and savings within Turkey's fragile economic structure. Ensuring economic growth and stability is vital for a country's prosperity and development. It is therefore crucial to understand how inflation, as a sustained increase in general price levels, erodes purchasing power and destabilizes the economy. GDP represents the total value of goods and services produced in an economy in a given period and is considered a broad measure of economic performance. Investment is seen as the engine of economic growth and development, increasing productivity and competitiveness by expanding the capital stock. Savings, in turn, play an indispensable role in financing investment and supporting economic stability. Understanding the interactions of these four key variables is critical for the design and implementation of effective macroeconomic policies. Using data from 1980 to 2022, this analysis with the Toda-Yamamoto Causality Test aims to reveal the causal relationships between these indicators in Turkey's economic structure. The analysis reveals causality from inflation to investments and from GDP to inflation. These findings provide important insights into which policy measures may be more effective in supporting Turkey's economic growth and stability.

Keywords

Savings, Investment, Growth, Inflation, Toda-Yamamoto.

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