# Trade Openness and Economic Growth in Turkey: A Rolling Frequency Domain Analysis

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## Abstract

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## 1. Introduction

## 2. Literature Review

## 3. Econometric Methodology

_{t}and x

_{t}are economic growth and trade openness respectively. It is assumed that h

_{t}has a finite-order VAR representation of the form:

_{t}is white noise with $E\left({\epsilon}_{t}\right)=0$ and $E\left({\epsilon}_{t}{\epsilon}_{t}{}^{\prime}\right)=\Sigma $, where Σ is positive definite. Let G be the lower triangular matrix of the Cholesky decomposition ${G}^{\prime}G={\Sigma}^{-1}$ such that $E\left({\eta}_{t}{\eta}_{t}{}^{\prime}\right)=I$ and ${\eta}_{t}=G{\epsilon}_{t}$. If the system is assumed to be stationary, the MA representation of the system can be formulated as following:

_{t}can be expressed as:

^{22}is the lower diagonal element of G

^{−1}and $\left|\mathsf{\Theta}\left(\mathrm{L}\right)\right|$ is the determinant of $\mathsf{\Theta}\left(\mathrm{L}\right)$. It follows that y does not Granger-cause x at frequency ω if:

_{t}is written as:

_{t}is third variable such as capital, labor, government expenditure, and terms of trade. Hosoya (2001) suggested that the causality measure is identical to the bivariate causality measure between u

_{t}and v

_{t}as follows:

## 4. Data and Estimation Results

## 5. Conclusions

## Author Contributions

## Funding

## Acknowledgments

## Conflicts of Interest

## References

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**Figure 1.**Breitung-Candelon-Granger Causality test results running from trade openness to real GDP growth in Turkey (1950–2014). The vertical axis shows the p-values. The p-value is the estimated probability to reject the null hypothesis of no Granger-causality. Dashed line indicates 5% statistical significance level. Lag lengths in the model specification are determined as 7. The VAR model is estimated with p + 1 lags.

**Figure 2.**Breitung-Candelon-Granger Causality test results running from real GDP growth trade openness in Turkey (1950–2014). The vertical axis shows the p-values. The p-value is the estimated probability to reject the null hypothesis of no Granger-causality. Dashed line indicates 5% statistical significance level. Lag lengths in the model specification are determined as 7. The VAR model is estimated with p + 1 lags.

**Figure 3.**Time-varying Granger-Breitung-Candelon Causality test results running from trade openness to real GDP growth with a rolling-window of 35 years. The vertical axis shows the p-values. The p-value is the estimated probability to reject the null hypothesis of no Granger-causality. Dashed line indicates 10% statistical significance level. Lag lengths in the model specification are determined as 7. The VAR model is estimated with p + 1 lags.

**Figure 4.**Time-varying Granger-Breitung-Candelon Causality test results running from real GDP growth to trade openness with a rolling-window of 35 years. The vertical axis shows the p-values. The p-value is the estimated probability to reject the null hypothesis of no Granger-causality. Dashed line indicates 10% statistical significance level. Lag lengths in the model specification are determined as 7. The VAR model is estimated with p + 1 lags.

Level | First Differences | |||
---|---|---|---|---|

Variables | ADF | PP | ADF | PP |

GDP | −4.157 *** | −4.158 *** | −9.234 *** | −16.326 *** |

[0.008] | [0.008] | [0.000] | [0.000] | |

Trade Openness | −1.633 | −1.907 | −2.771 | −7.093 *** |

[0.766] | [0.639] | [0.213] | [0.000] | |

Capital Stock | −2.816 * | −2.685 * | −5.496 *** | −9.417 *** |

[0.061] | [0.082] | [0.000] | [0.000] | |

Labor | −5.678 *** | −5.304 *** | −7.214 *** | −7.217 *** |

[0.000] | [0.000] | [0.000] | [0.000] | |

Government Expenditure | −2.097 | −2.752 | −10.162 *** | −16.090 *** |

[0.537] | [0.220] | [0.000] | [0.000] | |

Terms of trade | −5.500 *** | −5.404 *** | −11.249 *** | −30.255 *** |

[0.000] | [0.0000] | [0.000] | [0.000] |

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**MDPI and ACS Style**

Çevik, E.İ.; Atukeren, E.; Korkmaz, T. Trade Openness and Economic Growth in Turkey: A Rolling Frequency Domain Analysis. *Economies* **2019**, *7*, 41.
https://doi.org/10.3390/economies7020041

**AMA Style**

Çevik Eİ, Atukeren E, Korkmaz T. Trade Openness and Economic Growth in Turkey: A Rolling Frequency Domain Analysis. *Economies*. 2019; 7(2):41.
https://doi.org/10.3390/economies7020041

**Chicago/Turabian Style**

Çevik, Emrah İ., Erdal Atukeren, and Turhan Korkmaz. 2019. "Trade Openness and Economic Growth in Turkey: A Rolling Frequency Domain Analysis" *Economies* 7, no. 2: 41.
https://doi.org/10.3390/economies7020041