Causal Relationships between Financial Development, Trade Openness and Economic Growth: The Case of Turkey
Abstract
Problem statement: The main objective of this study was to examine the causality relations between financial development, trade openness and economic growth (GDP) for the Turkish economy. Approach: In time series context, recently developed econometric techniques were used: namely the Augmented Dickey-Fuller (ADF) for unit root, Johansen and Juselius (JJ) for cointegration and Granger causality test for causal relationships. Results: The findings of the study showed that while trade openness has a positive effect, financial development has a negative effect on growth. Conclusion: Moreover, the Granger causality test results revealed the presence of bicausal relationship between financial development, trade openness and growth indicating that economic policies aimed at financial development and trade openness have a statistically significant impact on economic growth.
DOI: https://doi.org/10.3844/jssp.2009.33.42
Copyright: © 2009 Fatih Yucel. This is an open access article distributed under the terms of the
Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
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Keywords
- Financial development
- trade openness
- economic growth
- a granger causality test
- cointegration test