ANALYSIS OF THE RELATIONSHIP BETWEEN ECONOMIC GROWTH, INFLATION AND UNEMPLOYMENT IN TURKEY WITH THE ARDL BOUNDS TESTING APPROACH

Abstract

The aim of this study is to examine the effects of economic growth and inflation on unemployment for the period 2005:1- 2020:9 in Turkey by using ARDL (Auto Regressive Distributed Lag) model. In the study, firstly unit root tests were carried out to determine whether economic growth (ind) and inflation (cpi) have long and short-term effects on unemployment (unemp). Then, the ARDL method was used to determine whether there is a long-term relationship between the series in the model where the unemployment rate is the dependent variable, the Industrial Production Index representing economic growth and the Consumer Price Index (CPI) representing inflation. Instead of GDP, the Industrial Production Index was preferred both to harmonize with the monthly data and to make a production-based analysis. As a result of the analysis, it was determined that there was a statistically significant cointegration relationship between the variables, and the short-term relationship was analyzed with the error correction model (ECM). As a result of the analysis, it has been determined that there is a cointegration relationship between unemployment, inflation rate and economic growth in Turkey. According to the results of the analysis, negative between unemployment and industrial production index; It is seen that there is a positive relationship between unemployment and inflation.