Asymmetric effects of inflation and inflation uncertainty on economic growth in Turkey: Threshold analysis

In this study, the asymmetric effects of inflation and inflation uncertainty on economic growth in Turkey were investigated. Inflation-economic growth analyzes have become a rapidly growing field of research, but little attention has been paid to its relationship to inflation uncertainty. Moreover, previous studies have ignored whether the relationship between inflation, inflation uncertainty and economic growth in the long run is nonlinear. The main subject of this study, in particular, focuses on whether inflation and inflation uncertainty affect economic growth negatively or positively. In the study, ARCH-GARCH and TAR models were applied to a data set covering the period 2005:01 - 2021:07. Below the 12.15% threshold of inflation, inflation has a significant and negative effect on industrial production, while inflation uncertainty is statistically insignificant. It was concluded that the uncertainty variable had a negative and statistically significant effect on the industry in a period when inflation was above the the threshold level.