Abstract:

Purpose - This study is aimed at investigating the existence of causal relationship between the economic trust index and investment instruments. Method - The study, using monthly data for the periods January 2007–June 2019, examines the existence and direction of the relationship between the economic confidence index and the USD 100 and the price of gold with the Toda-Yamamoto approach. Results - The study found that there was no causal relationship from the BIST100 index to the economic trust index, from the economic trust index to the BIST100 index, the existence of a one-way relationship. On the other hand, the one-way causal relationship from USD/TL to the economic confidence index is observed, while there is no causal relationship between gold prices and the economic confidence index. The Economic Trust Index provides important information about the assessments and expectations of consumers and producers regarding the economic situation, and is considered a major indicator in this direction. Research findings show that the economic trust index can be used as an indicator for predicting volatility in the BIST100 index, but it cannot be used as an indicator for predicting gold prices and changes in the USD/TL currency. It also shows that changes in the USD/TL currency play an important role in the expectations of producers and consumers towards the economic appearance.

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