THE RELATIONSHİP BETWEEN TOTAL FACTOR PRODUCTIVITY AND INFLATION IN TURKEY: ARDL BOUNDARY TEST APPROACH
TÜRKİYE ’DE TOPLAM FAKTÖR VERİMLİLİĞİ İLE ENFLASYON ARASINDAKİ İLİŞKİ: ARDL SINIR TESTİ YAKLAŞIMI

Author : Bülent Diclehan ÇADIRCI
Number of pages : 295-310

Abstract

In this study, the total factor productivity calculated using annual data from 1980-2017 with OLS in Turkey; then, the long and short term effects of total factor productivity on inflation was examined by ARDL Boundary Test. According to ARDL model, changes in total factor productivity have no effect on inflation rate in the long run; it has been concluded that it has a positive effect in case of no lag in the short run but has positive effect on the lags values. The error correction coefficient of the model was statistically significant and 28% of short-term imbalances disappeared in the long term. However, the logarithmic real national income variable used as the control variable in the model has a positive coefficient in the long run and negative coefficient in the short run. It is stated that the increase in total factor productivity increases production in the first stage and this puts downward pressure on inflation; in the following stages, it can be interpreted that the increases in labor or capital costs caused by the increase in productivity triggered inflation.

Keywords

Total Factor Productivity, Inflation, The Least Square Methods, ARDL Boundary Test

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