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Long Run Profit Maximization in the Turkish Manufacturing Sector

Avni Hanedar, Elmas Yaldız Hanedar (), Ozgul Bilici () and Onur Akkaya
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Ozgul Bilici: Department of Economics, Izmir University of Economics

No 06/02, Discussion Paper Series from Dokuz Eylül University, Faculty of Business, Department of Economics

Abstract: The purpose of this research is to investigate whether the long-run relationship implied by profit maximization is valid for the Turkish manufacturing industry for the period of 1950-2001. During this period, the Turkish economy has experienced important policy changes, for example the implementation of liberalization policies after the 1980s. Thus, the possible effects of economic policy implementations over the profit maximization in the Turkish manufacturing sector will also be studied by using advanced time series techniques such as the Zivot and Andrews (1992) unit root test and the Gregory and Hansen (1996) co-integration test. The results of the study show that rationalization mechanism does not appear to work in Turkey. Because most of the previous studies on this issue are concentrated in developed countries and also, there has been little research into the Turkish manufacturing sector, the contribution of this study is important.

Keywords: Long run equilibrium; co-integration; elasticity of substitution; structural breaks (search for similar items in EconPapers)
JEL-codes: C32 J23 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2006-11-30, Revised 2006-11-30
New Economics Papers: this item is included in nep-cwa
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