Abstract:

This study investigates the causal relationship between economic growth and domestic savings – fixed capital investments in Turkey for the period from 1960 to 2009. In this thesis study, covered data start from 1960 to 2009 that includes provided on annual basis, the methods are used Unit Root tests (ADF, P-P, KPSS), Granger causality test, Toda Yamamoto (M-WALD) causality test and Zivot-Andrews tests, short and long term growth relations are revealed and possible economic growth policies are discussed in the light of the findings revealing the determiners of the economic growth of Turkey. Short and long term relationships are examined in Granger causality tests and MWALD causality tests. While Granger causality tests allow for "Short-term" causality analysis, MWALD causality tests allow for "Long-term" causality analysis. In the empirical study on Turkey, a positive and significant one-way causal relationship from exports toward economic growth has been found. Furthermore a bidirectional and positive correlation has been found in the short and long-term causal relationship between domestic savings – fixed capital investments and economic growth. Long-term influence each other in both variables. According to the Zivot-Andrews breaking test the breaking years are 1999 in domestic savings and 2001 in GDP and fixed capital investments. Decline in domestic saving in Turkey, while the decline in fixed capital investment and ultimately lead to reduced economic growth, foreign debt and current account deficit is growing throw.

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