An Analysis of the Dynamics of Aggregate Consumption in the Turkish Economy (1987-2019)

This thesis aims to investigate the long-run and short-run relationships between consumption expenditure and income from 1987 to 2019 in Turkey. We used the Dual Adjustment approach that models the dual co-movements of the different components of time series variables. Data is sourced from World Bank’s database of World Development Indicators. We found empirical evidence on the presence of common trend for consumption and income in Turkey. Additionally, we found a significant relation among the transitory components of income and consumption. Turkish data reveals evidence on singular adjustment and hence lends support to the Dynamic Keynesian Consumption Function.