Are Economic Freedoms and Economic Growth Interrelated? A General Evaluation and Analysis on Turkey

Serdar Yay and Zeynep EZANOÄžLU

Fiscaoeconomia, 2023, issue 2

Abstract: In this study, it is aimed to examine the relationship between the increase in production and therefore the national income as a result of the increase in production capacity in a country, in other words, the relationship between economic growth and economic freedoms and sub-indices in the light of Turkey's data between the years 1995-2021. Data on economic freedoms used in the analysis were obtained from the Economic Freedom Index published by the Heritage Foundation and The Wall Street Journal since 1995, and data on economic growth were obtained from the World Bank. The relationship between economic freedoms and sub-indices and economic growth between the years 1995-2021 in Turkey was analyzed with the Toda-Yamamoto causality test. In this direction, firstly, Perron’s (1989) unit root test with break was applied to investigate the stationarity of the series, and the ARDL cointegration test was applied because the series were stationary at different levels and had low observations. Afterwards, the VAR model was established and the characteristic polynomial roots, autocorrelation and varying variance stability conditions were tested. After the model provided all the stability conditions, the Toda-Yamamoto causality test was performed and at the end of the study, it was found that there is a causality from economic freedom to economic growth in Turkey.

Keywords: Economic Freedoms; Economic Growth; Time Series Analysis; Granger Causality (search for similar items in EconPapers)
JEL-codes: C32 C58 O11 O40 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:230217

DOI: 10.25295/fsecon.1261507

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