ARE INSTITUTIONS RELATED TO ECONOMIC INDICATORS? AN ASSAY ON THE CASE OF TURKEY: JOHANSEN COINTEGRATION ANALYSIS AND GRANGER CAUSALITY TEST

Abstract

This study examines the relationship between institutional structure parameters and macroeconomic indicators in Turkey in the period of 1995-2020 theoretically and empirically. The long-term relationship between the institutional structure and macroeconomic indicators in Turkey has been examined with the Johansen Cointegration Analysis. According to the results of the analysis, it has been observed that there is a cointegration relationship between the institutional structure parameters and macroeconomic indicators in all three models tested. It has been concluded that especially freedom of investment and monetary freedom have a positive effect on Turkey's economic growth and exports in the long run. It is seen that the general level of economic freedoms, that is, the general score of the institutional structure, has a positive relationship on foreign direct investments in the long run.