The relationship between inflation, minimum wage and growth

The inflation problem, which continues to exist in the Turkish economy, has shown its effect more in recent years. The aim of this study is to investigate the relationship between inflation and variables such as wage increase, economic growth and exchange rate in the last 30 years. The Granger Causality test is applied in this study, which is performed by applying VAR analysis. According to the Granger causality test results, a bidirectional causality has been determined between inflation and minimum wage and between exchange rate and minimum wage. In addition, one-way causality is found to exist between economic growth and minimum wage from growth to minimum wage. According to the results of the first model of our study, which is conducted by applying two models; there is a positive relationship between inflation and minimum wage and exchange rate, while a negative relationship exists between inflation and growth. In other words, while minimum wage and exchange rate increase inflation, growth decreases inflation. According to the results of the second model, on the other hand, while inflation and growth increase the minimum wage, the exchange rate decreases the minimum wage.