Effects of growth volatility on economic performance - Empirical evidence from Turkey

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Berument M. H., Dinçer N. N., Mustafaoglu Z.

EUROPEAN JOURNAL OF OPERATIONAL RESEARCH, vol.217, no.2, pp.351-356, 2012 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 217 Issue: 2
  • Publication Date: 2012
  • Doi Number: 10.1016/j.ejor.2011.09.026
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.351-356
  • Keywords: Economics, Sustainability, Growth volatility, Total factor productivity, Investment, Real exchange rate, REAL EXCHANGE-RATE, OUTPUT VARIABILITY, UNCERTAINTY, IRREVERSIBILITY, INVESTMENT, INFLATION, POLICY, LINK
  • TED University Affiliated: No


This paper examines the relationship between growth and growth volatility for a small open economy with high growth volatility: Turkey. Quarterly data for the period from 1987Q1 to 2007Q3 suggests that growth volatility reduces growth and that this result is robust under different specifications. This paper contributes to the literature by focusing on how growth volatility affects a set of variables that are crucial for growth. Empirical evidence from Turkey suggests that higher growth volatility reduces total factor productivity, investment, and the foreign currency value of local currency (depreciation). Moreover, it increases employment, though the evidence for this is not statistically significant. Crown Copyright (C), 2011 Published by Elsevier B.V. All rights reserved.