Is Gibson Paradox Valid for Türkiye? Nonlinear Time Series Application

YeÅŸim Kubar, Seyit Taha Ketencä° and Yasemin Çä°ã‡ek

Fiscaoeconomia, 2026, issue 1

Abstract: The Gibson paradox refers to the positive relationship between the price level and the interest rate. It is one of the most debated empirical problems in macroeconomics. The aim of this research is to examine whether the Gibson paradox is applicable to the Turkish economy. In this study, the correlation between the consumer price index and the deposit interest rate was tested using monthly data for the period 2000:01 and 2022:12 using nonlinear unit root test cointegration analysis. Our findings show that the Gibson paradox holds true during the relevant period. It was also concluded that there is a long-term relationship between the price level and the interest rate, with the effect running from the nominal interest rate to the price level. This study supports the hypothesis that the Gibson paradox exists in Türkiye.

Keywords: Gibson Paradox; Nonlinear Unit Root Test; HepsaÄŸ Cointegration Test (search for similar items in EconPapers)
JEL-codes: C22 C58 E43 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:260114

DOI: 10.25295/fsecon.1628632

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