Abstract:

Private consumption expenditures, which constitute more than half of the real gross domestic product, are significant for the macroeconomy. The primary purpose of this study is to investigate the effects of plastic card expenditures, gross domestic product, and inflation on private consumption expenditures through the case of Turkey. According to the results obtained from the linear auto-regressive distributed lag (ARDL) method applied using quarterly data for the period 2014-2021: i) long-term private consumption expenditures, plastic card expenditures, gross domestic product, and inflation variables are cointegrated such that their linear combinations converge to an equilibrium point; ii) plastic card expenditures in the long run and gross domestic product increased private consumption expenditures; and iii) the obtained short-term coefficients parallel those of the long-term, with inflation being more effective at suppressing private consumption in the short run than in the long run. According to the Toda-Yamamoto causality test results: iv) bidirectional causality relationships exist between private consumption expenditure and gross domestic product, between private consumption expenditure and plastic card expenditure, and between gross domestic product and plastic card expenditures; and v) one-way causality relationships exist going from plastic card expenditures to inflation and from inflation to private consumption expenditures. Policymakers recommended that a perspective that prioritizes the fight against inflation is required to increase household welfare and that objective limitations should be placed on plastic cards.

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