A BOOTSTRAP PANEL GRANGER CAUSALITY ANALYSIS OF RELATIONSHIPS BETWEEN POLITICAL INSTABILITY AND MACROECONOMIC VARIABLES / Politik İstikrarsızlık Ve Makroekonomik Değişkenler Arasındaki İlişkilerin Bootstrap Panel Nedensellik Testi İle Analizi

• Main Authors: Mustafa Özer, Merve Kocaman
• Format: Article
• Language: English
• Published: Recep Tayyip Erdoğan Üniversitesi 2019-10-01
• Series: Uluslararası Ekonomi, İşletme ve Politika Dergisi
• Subjects: politik i̇stikrarsızlık; yatay kesit bağımlılığı; eğim katsayılarının homojenliği; bootstrap panel nedensellik testi; political instability; cross-sectional dependence; slope homogeneity; bootstrap panel granger causality
• Online Access: https://dergipark.org.tr/tr/pub/ueip/issue/44963/585261

In this study, we try to analyze the causal relationship between political instability and macroeconomic variables for selected emerging markets such as Turkey, India, Russia, Mexico and Indonesia by using panel bootstrap causality tests over the period of 1992 and 2016. Selected macroeconomic variables are growth, inflation and exchange rate. Even though the results of the study differ across nations in the panel and not indicating to many causal relations, they provide the evidences of causal relations between political instability and some macroeconomic variables. Although it is hard to generalize the major findings of the study to all countries in the sample, still we can conclude that unlike the expectations, changes in most of the macroeconomic variables do cause in changes in political instability. Thus, achieving economic stability in terms of low inflation, high growth and stable exchange rate seem to be key factors to achieve political stability.