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DOI :10.26650/B/SS10.2021.013.30   IUP :10.26650/B/SS10.2021.013.30    Full Text (PDF)

Asymmetric Relationship Between Economic Growth and Income Distribution in Turkey: A NARDL Approach

Rahmi YamakCan Sağlam

The relationship between economic growth and income inequality is one of the most controversial subjects in the growth and development literature. One of the most important studies is undoubtedly that of Simon Kuznets (1955). According to Kuznets (1955), inequality in income distribution increases as economic growth increases during only the early stages of economic development. However, after income reaches a certain level, further economic growth will begin decreasing income distribution inequality. The resulting inverted U-shaped functional relationship between income distribution inequality and economic growth is called the Kuznets curve.

The inverted U-shaped curve hypothesis of Kuznets (1955) has been examined by many studies in the empirical literature. The validity of the hypothesis varies considerably, depending on the economic structure and developmental level of the country studied or according to the period and method applied. Therefore, there is no definitive finding regarding the empirical validity of this hypothesis. Some studies strongly support it, while others reject it in various ways. Deutsch and Cyber (2004) argued that the relationship between the two variables is actually an inverted J shaped curve. Similarly, Shahbaz (2010) found that the relationship is expressed in an inverted S shaped curve. However, almost every study, except for Bahmani-Oskooee and Motavallizadeh-Ardakani (2018), assume a symmetric relationship between income inequality and economic growth. If there is any asymmetric relationship between income inequality and economic growth, the findings obtained by those studies that applied symmetric methods may be insufficient to reflect the actual long-run relationships between the two variables. In this respect, as Bahmani-Oskooee and Motavallizadeh-Ardakani (2018) suggested, it is very important to perform analyses that reflect asymmetric effects when investigating the relationship between income inequality and economic growth. The aim of this study is to investigate whether economic growth has an asymmetric effect on Turkey’s income distribution for the 1978–2015 period. For this purpose, the non-linear autoregressive distributed lag model (NARDL) developed by Shin et al. (2014) is employed in econometric analysis of our study. The Gini coefficient is used as an indicator of income distribution. As control variables, the inflation rate and globalization index are used in the model. The Gini index series was obtained from the Standardized World Income Distribution Inequality Database (SWIID) produced by Frederick Solt. Economic growth and inflation variables were compiled from the World Bank database. The globalization index was obtained from the KOF Swiss Economic Institute.  

According to Augmented Dickey-Fuller (ADF) and Phillips–Perron (PP) unit root testing, the economic growth rate is stationary at its level, but the other variables are stationary at their first differences. The estimated statistics of the long-run equation for the NARDL model indicate that an asymmetric cointegration relationship exists between the Gini index, economic growth, inflation, and the globalization index. The calculated F-statistic of the NARDL model is 7.05. It is statistically significant at the 1% level, compared to the critical limit values. The coefficient of the positive long-run growth rate is −0.393, while the coefficient of the negative growth rate is −0.641. All long-run coefficients are statistically significant at 1%. An increase or decrease in the economic growth rate adversely affects the Gini index. However, according to the findings, an increase or decrease in the growth rate has an asymmetric effect in terms of the magnitude of its effect on the Gini index. In the short run, an increase or decrease in the growth rate decreases income inequality, and a decrease in the growth rate impacts income distribution more heavily. According to the error correction model, the coefficient of the error correction term is –1.26, which is statistically significant, as expected. In the long-run, an increase in the growth rate decreases income inequality, but a decrease in the growth rate increases income inequality. Conversely, a decrease in the growth rate in the long-run affects income distribution more than an increase. Lastly, as expected, increases in inflation over the long term increase income inequality, and an increase in globalization decreases income inequality.


DOI :10.26650/B/SS10.2021.013.30   IUP :10.26650/B/SS10.2021.013.30    Full Text (PDF)

Türkiye’de Ekonomik Büyüme ve Gelir Dağılımı İlişkisi: NARDL Yaklaşımı

Rahmi YamakCan Sağlam

Bu çalışmanın amacı, 1978-2015 dönemi için Türkiye’de ekonomik büyümenin gelir dağılımı üzerinde asimetrik bir etkiye sahip olup olmadığını incelemektir. Bu amaçla çalışmanın ekonometrik analizinde Doğrusal Olmayan Gecikmesi Dağıtılmış Otoregresif Model (NARDL) kullanılmıştır. Gelir dağılımının göstergesi olarak gini endeksi değişkeni kullanılmıştır. Enflasyon oranı ve küresel dışa açıklık endeksi değişkenleri kontrol değişkenler olarak modele dahil edilmiştir. NARDL modeli sonuçlarına göre gini endeksi, büyüme oranı, enflasyon oranı ve küresel dışa açıklık endeksi arasında asimetrik eşbütünleşme ilişkisi tespit edilmiştir. Bununla birlikte, kısa ve uzun dönem itibariyle gelir eşitsizliği ile ekonomik büyüme arasında asimetrik ilişkilerin varlığı tespit edilmiştir. Kısa dönemde büyüme oranındaki artış ve azalışların gelir eşitsizliğini azalttığı ve büyüme oranındaki azalışların gelir dağılımını daha fazla etkilediği bulgusuna ulaşılmıştır. Uzun dönemde ise büyüme oranındaki artışların gelir eşitsizliğini azalttığı buna karşın büyüme oranındaki azalışların gelir eşitsizliğini arttırdığı görülmüştür. Bununla birlikte, uzun dönem itibariyle büyüme oranındaki azalışların, artışlara nazaran gelir dağılımını daha fazla etkilediği tespit edilmiştir. Ayrıca, beklentiler doğrultusunda uzun dönemde enflasyondaki artışların gelir eşitsizliğini arttırdığı, küreselleşmenin ise gelir eşitsizliğini azalttığı bulguları elde edilmiştir.



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