Testing The Validity of The Phillips Curve for Turkey With Vector Autoregressive and Markov Switching Models on The Basis of Inflation and Unemployment

Abstract

In this study, we tested the validity of the Phillips Curve for Turkey. We used Markov Switching Model for examine the relationship between two variables in different regime periods, Engle Granger Causality Test for detect the causality between two variables, Johansen Cointegration Test for observe the long term equilibrium relationship and The Impulse Response Analysis and Variance Decomposition Analysis for investigate the explanatory effect of two variables on each other. As a result of the analysis, it was determined that Inflation and Unemployment act together in the short and long term. Between 2010M01 and 2017M10, it was determined that the Phillips Curve is ineffective for Turkey.

Türkiye’de Phillips Eğrisi’nin Geçerliliğinin Fourier Eşbütünleşme ve Fourier Nedensellik Testleri ile Analizi

“…As a result, this study has also concluded that the Phillips curve is invalid for Turkey in line with the period addressed and analyses conducted. This conclusion is similar to the conclusions reached in the studies carried out by Kuştepeli (2005), Önder (2006), Çatık et al (2008), Mangır and Erdoğan (2012), Tabar and Çetin (2016), Özçelik and Uslu (2017), Petek and Aysu (2017), Karacan (2018), andYılmaz et al (2019).…”