Istanbul Journal of Economics
Does Plastic Card Spending Have an Impact on Household Private Consumption Expenditures? Empirical Evidence Based on the ARDL MethodSerkan Göksu
Private consumption expenditures, which constitute more than half of the real gross domestic product, are significant for the macroeconomy. The primary purpose of this study is to investigate the effects of plastic card expenditures, gross domestic product, and inflation on private consumption expenditures through the case of Turkey. According to the results obtained from the linear auto-regressive distributed lag (ARDL) method applied using quarterly data for the period 2014-2021: i) long-term private consumption expenditures, plastic card expenditures, gross domestic product, and inflation variables are cointegrated such that their linear combinations converge to an equilibrium point; ii) plastic card expenditures in the long run and gross domestic product increased private consumption expenditures; and iii) the obtained short-term coefficients parallel those of the long-term, with inflation being more effective at suppressing private consumption in the short run than in the long run. According to the Toda-Yamamoto causality test results: iv) bidirectional causality relationships exist between private consumption expenditure and gross domestic product, between private consumption expenditure and plastic card expenditure, and between gross domestic product and plastic card expenditures; and v) one-way causality relationships exist going from plastic card expenditures to inflation and from inflation to private consumption expenditures. Policymakers recommended that a perspective that prioritizes the fight against inflation is required to increase household welfare and that objective limitations should be placed on plastic cards.
Plastik Kart Harcamaları Hanehalkı Özel Tüketim Harcamaları Üzerinde Etkili mi? ARDL Yönteminden Ampirik KanıtlarSerkan Göksu
Reel gayrisafi yurtiçi hasılanın yarısından daha fazlasını oluşturan özel tüketim harcamalarının makro ekonomi için olan önemi yadsınamaz. Bu çalışmanın temel amacı plastik kart harcamaları, gayrisafi yurtiçi hasıla ve enflasyonun özel tüketim harcamaları üzerindeki etkisini Türkiye örneklemi üzerinden araştırmaktır. 2014-2021 dönemine ilişkin çeyreklik veriler kullanarak uygulanan doğrusal ARDL(Autoregressive Distributed Lag) yönteminden elde edilen sonuçlara göre: i) uzun dönemde özel tüketim harcamaları, plastik kart harcamaları, gayrisafi yurtiçi hasıla ve enflasyon değişkenleri arasında eş bütünleşik olduğu yani doğrusal birleşimlerinin denge noktasına yakınsandığı ii) uzun dönemde plastik kart harcamalarının ve gayrisafi yurtiçi hasılanın özel tüketim harcamalarını arttırdığı; enflasyonun ise özel tüketim harcamalarını azalttığı iii) kısa dönemde elde edilen katsayıların yönü itibariyle uzun dönemdekilerle paralel olduğu ancak özel tüketimi baskılamada enflasyonun kısa dönemde, uzun dönemdekinden daha büyük bir etkisinin olduğu tespit edilmiştir. Toda-Yamamoto nedensellik test sonuçlarına göre: iv) özel tüketim harcaması ile gayrisafi yurtiçi hasıla ve plastik kart harcamaları arasında; gayrisafi yurtiçi hasıla ile plastik kart harcamaları arasında çift yönlü nedensellik ilişkisi v) plastik kart harcamalarından enflasyona, enflasyondan da özel tüketim harcamalarına doğru tek yönlü nedensellik ilişkisi tespit edilmiştir. Hanehalklarının refah düzeylerini arttırmada politika yapıcılara enflasyonda kalıcı bir azalışı önceleyen bir bakış açısının gerektiği ve plastik kartlarda objektif limitlendirmeler yapılması önerilebilir.
In Turkiye, household consumption expenditures share of the gross domestic product was approximately 56.4% in 2020. (Turkish Statistical Institute [TurkStat], 2021). Therefore, private consumption expenditures constitute more than half of the gross domestic product and are its most crucial component. This percentage is high enough to even indicate the importance of this study. The main motivation of this study is to research private consumption expenditures, which is accepted as an essential indicator of the household welfare level. The primary purpose of this study is to investigate the effects of plastic card expenditures, gross domestic product, and inflation on private consumption expenditures through the case of Turkiye.
Considering the size of the expenditures made with debit cards within the Turkish economy, the analyses made to determine consumption only by credit cards while omitting bank cards contain a critical deficiency. Therefore, determining the effect of plastic card expenditures on private consumption expenditures is vitally important. In actuality, this feature distinguishes the study from other studies in the literature. For this reason, this study separately examines the short- and long-term relationships between plastic card expenditures and private consumption expenditures and is expected to fill this gap in the literature.
This study examines the effects of plastic card expenditures and inflation on private consumption expenditures using 32 quarterly datasets for the 2014Q1- 2021Q4 period through the case of Turkiye. Because the variables consist of quarterly data, the variables have been seasonally adjusted through the seasonaltrend decomposition using LOESS (STL) method. In addition, variables are included in the analysis in their logarithmic form to allow the analysis results to be interpreted as percentages and to converge the outliers. The analytical section of the study first presents the descriptive statistics of the variables, the correlation matrix, and figures. Next, the augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests are applied to determine the appropriate method and determine the stationarity of the variables. Afterward, any possible cointegration relationships between the variables in the model are investigated with the ARDL method, the short- and long-term coefficients are estimated, and structural stability and smoothness of the model is tested with various diagnostic tests. Lastly, the causality relationships among the variables in the model are tested using the Toda-Yamamoto causality tests. The findings obtained as a result of the analysis can be summarized as follows:
The ARDL limit test results show a linear cointegration among the variables of household private consumption expenditures, plastic card expenditures, gross domestic product, and inflation . This result means that the variables move in unison in the long run. All the coefficients are statistically significant both in the long- and short-term. According to the long-term coefficient estimation results, private consumption expenditures increase as gross domestic product and plastic card expenditures increase in Turkiye. As inflation increases, private consumption expenditures decrease. In the long run, a 1% increase (or decrease) in gross domestic product increases (or decreases) private consumption expenditures by about 0.64%. This result shows that Turkiye’s private consumption function is compatible with the Keynesian consumption function. This result also proves gross domestic product to be the most influential factor in private consumption. In simpler terms, as the gross domestic product increases in Turkiye, private consumption expenditures increase in the long run; however, consumption does not increase as much as income. In the long run, a 1% increase (or decrease) in plastic card expenditures increases (or decreases) private consumption expenditures by approximately 0.38%. This result can be interpreted as household private consumption having quite a high dependence on plastic cards. This result can additionally be interpreted to mean increases in household plastic card ownership increases household consumption motive. The long-term inflation coefficient being identified as -0.36 can be interpreted as inflation suppressing/ reducing private consumption expenditures. When inflation increases (or decreases) by 1%, private consumption expenditures decrease (or increase) by about 0.36%. The short-run coefficients are similar in direction to the long-run ones. However, inflation has a much stronger and statistically more significant effect on reducing short-term private consumption expenditures than in the long run. In addition, the model successfully passed all the diagnostic tests.
According to the Toda‐Yamamoto causality test results, bidirectional causality relationships exist between private consumption expenditure and gross domestic product, between private consumption expenditures and plastic card expenditures, and between gross domestic product and plastic card expenditures. In addition, one-way (unidirectional) causality relationships exist going from plastic card expenditures to inflation and from inflation to private consumption expenditures.
The study’s empirical findings reveal that increasing the gross domestic product and plastic card expenditures and reducing inflation rates will have positive effects on private consumption expenditures in Turkiye. Therefore, these variables can be said to be outstanding instruments for stimulating the economy and stimulating aggregate demand during an economic recession. The significant negative error correction term indicates that the Turkish economy will adapt relatively quickly to an external shock.