The analysis of public and private sector construction expenditures on economic growth in Turkey

Baro model, analyzing the effects of infrastructure investments and public policies of which are carried out by the public on economic growth, essentially adopts internal growth models and also adds new concepts in this field. Construction sector in turkey occupying an important place in public expenditures and investments has connections with more than 200 sub-sectors, and has the potential of being the leading sector of short term economic growth. Private and public expenditures that are applied in this field can affect economic growth considerably. In this study, the effects of public and private sector construction expenditures on economic growth in Turkey is analyzed by time series analysis within the framework of Barro Model for 1987:Q1-2017:Q3 period. The stationarity of the series is investigated by ADF and PP methods and it is determined that the variable KAMU is I(0), GDP and OZEL are I(1). Since the series are not integrated at the same level, the existence of cointegration relationship between these series is examined by Bounds Testing method and it is determined that the series are cointegrated, that is, there is a long-run relationship between them. Long term relationships between the series are estimated by ARDL method and it is determined that the gross domestic product in the analysis period increased by 1.0043% when the public-sector construction expenditures increased by 1% and by 0.56% when the private sector construction expenditures increased by 1%. In short term analysis; it is found that the effects of increases in public construction expenditures on economic growth are lower than private sector construction expenditures, and what's more, public construction expenditures harm economic growth in later periods. The error correction mechanism of the model operates. Causality relationships between the series are investigated by Frequency Domain Causality Test and a strong causality from public construction expenditures to national income is found in the long term and a weak causality in the short term, while a causality from national income to public sector construction spending is determined only in medium term. On the other hand, while strong causality relationships from private sector construction expenditures to national income are determined in the short, medium and long term, it is seen that there is only middle and long term causality relationships from national income to the private sector construction expenditures. From these results; it can be said that there is a mutual interaction between construction sector and economic growth.