Relation of Economic Growth and Inflation in Turkey

It is one of the most important macroeconomic objectives of ensuring the country's economic growth. However, these policies can sometimes lead to deterioration in some elements of the economy. For this reason, the relationship between economic growth and inflation is indicative of economic policy. In this respect, the relationship between economic growth and inflation in Turkey is examined for the period 2003:Q1-2018:Q1. As a result of the Granger causality test, it is concluded that GDP is the cause of inflation at a level of 5 percent significance, but a causality relationship from inflation to GDP has not been established. On the other hand, as a result of the unit root test, it is determined that the levels of GDP and inflation series are not stable and become stable when the first difference is taken. Regression results made with non-stationary variables can lead to spurious regression. For this reason, cointegration analysis was performed between the variables, but it has not been observed to any cointegration. This reveals that there is no long-term relationship between GDP and inflation and the series act independently of each other in the long-term