Traditional unit root tests display a tendency to be nonstationary in the case of structural breaks and nonlinearity. To eliminate this problem this paper proposes a new flexible Fourier form nonlinear unit root test. This test eliminates this problem to add structural breaks and nonlinearity together to the test procedure. In this test procedure, structural breaks are modeled by means of a Fourier function and nonlinear adjustment is modeled by means of an Exponential Smooth Threshold Autoregressive (ESTAR) model. The simulation results indicate that the proposed unit root test is more powerful than the Kruse (2011) and KSS(2003) tests.

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Energy is one of the key factors of maintaining a quality life with economic and social development. Accordingly, measuring the development level of a given country can be possible by considering the development level of the energy sector of that country. The purpose of this study is to examine the relation between the consumption of several energy resources classified as fossil, renewable and nuclear resources with carbon dioxide emission. For this purpose, monthly data of the U.S.A. covering the period of 1990-2011 were used and Threshold Error Correction and Threshold Granger Causality analyses were carried out with the Hansen and Seo (2002) approach. Findings of the study indicate the presence of a causality relation between the consumption levels of the discussed energy resources and CO2 emission.

Purchasing Power Parity has been one of the most popular topics in international economy and has been studied by many researchers for different countries and country groups to date. The purpose of this study is to analyze the validity of the Purchasing Power Parity in emerging seven countries (E7) using relevant econometric methods. The Harvey and Leybourne ( 2007) and Harvey et al. (2008) linearity tests have been used to investigate the linearity of real exchange rate series. The validity of the Purchasing Power Parity was analyzed using the Lee and Strazicich ( 2003) unit root test that allows for two structural breaks for linear series. The Purchasing Power Parity for nonlinear series was analyzed using the Sollis ( 2009) nonlinear unit root test. As a result of the analysis, purchasing power parity is valid only for the model that allows for breaks in both the level and trend in Brazil and India for linear series. Purchasing power parity is valid only in the demeaned model for China. The findings indicate that the validity of the Purchasing Power Parity is not accepted for E7 countries in many cases.

The credit default swap transaction has started to be considered as an important indicator reflecting the credit risks of countries especially after the 2008 global financial crisis. The CDS premium is a type of contract that allows the risk to be passed on to someone else and is a widely used instrument in derivative markets. CDS premium, which can be expressed as credit insurance, is very important for managing and controlling the credit risk of a country or company. The changing of CDS premium have direct and/or indirect effects on economic indicators in many fragile countries such as Turkey. CDS premium is also affected by the change in these variables. An increase in the risk premium is reflected in the exchange rates, and the interest rate must be increased in order to ensure the stability of the exchange rates. However, there may be cases where such relations are not seen as a direct one-way relationship with a direct transition mechanism. It is also a very restrictive assumption to expect these relationships to be linear. It is important to determine the direction of the nonlinear relationship between exchange rate and interest rates and CDS premium. n this study, the direction of causality between these variables is analyzed by nonlinear causality tests.