Abstract:

This study aims to investigate the relationship between inflation, unemployment, and economic growth at the regional level for Türkiye. For this purpose, the data set covering the period 2005-2021 for 26 NUTS-2 regions in Türkiye was used and methods that take into account the cross-section dependency were applied. Coefficient estimation was made using the Pooled Mean Group (PMG) estimator. As a result of the analysis, the error correction parameter was found to be negative and significant. Approximately 42% of the deviation that will occur in any period will be corrected in the next period, and in this way, the system will move toward long-term equilibrium. Long-term parameters of inflation and unemployment were determined as negative and significant. Inflation and unemployment rate have been identified to reduce economic growth in the long run. All these findings show that unemployment and inflation play an important role in economic growth. The expected contribution of this study to the literature is to investigate the effects of inflation and unemployment on economic growth at the regional level for Türkiye. As a result of the study, it has been revealed that the fight against long-term unemployment and inflation is an important factor in achieving economic growth targets. Policymakers should put forward policies that will reduce inflation and unemployment.

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