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A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES

Year 2022, Volume: 10 Issue: 2, 130 - 138, 29.12.2022

Abstract

Uncertainty is a phenomenon that can be seen in almost every area of daily life. Decision units in the economy cannot predict the consequences of their decisions in case of increased uncertainty. Uncertainty situations that can be seen in economic life may cause an economic shock and unexpected consequences of this shock. Epidemics, wars and sanctions applied after or during the war in the globalizing world cause economic and political uncertainties. Decisions taken under uncertainty lead economic agents to act more cautiously, as future situations cannot be foreseen. These cautious behaviors cause problems in employment related to production and consumption, in other words unemployment problem, decrease in incomes of households and thus decrease in investment-savings ratios. Therefore, examining the effects of uncertainties on economic indicators is important in terms of ensuring efficiency and productivity in the market. The aim of this study is to test the existence of the long-term relationship between the economic policy uncertainty index and unemployment rate with quarterly data covering the 1996-2022 period for the G-7 countries. For this purpose, the panel fourier cointegration test, which is a new generation test that takes into account nonlinear structural breaks and cross-section dependency, was applied. As a result of the analysis, a long-term relationship was determined between the economic policy uncertainty index and the unemployment rate in each of the G-7 countries. Therefore, it is important for the unemployment rate not to experience uncertainty in economic policies.

References

  • Alada, A. D. (2000). Economic Philosophy and Uncertainty. Istanbul: Context Publications.
  • Alada, A. D. (1988). İktisatta Belirsizlik Anlayışı Üzerine Notlar . ODTÜ Gelişme Dergisi, 184-185.
  • Al-Thaqeb, S. A., Algharabali, B. G., and Alabdulghafour, K. T. (2020). The pandemic and economic policy uncertainty. International Journal of Finance & Economics.
  • Bernanke, B. S. (1983). Irreversibility, uncertainty, and cyclical investment. The quarterly journal of economics, 98(1), 85-106.
  • Bloom, N. (2009). The impact of uncertainty shocks. Econometrica, 77(3), 623-685.
  • Caggiano, G., Castelnuovo, E., and Groshenny, N. (2014). Uncertainty shocks and unemployment dynamics in US recessions. Journal of Monetary Economics, 67, 78-92.
  • Caggiano, G., Castelnuovo, E., and Figueres, J. M. (2017). Economic policy uncertainty and unemployment in the United States: A nonlinear approach. Economics Letters, 151, 31-34.
  • Caggiano, G., Castelnuovo, E., and Figueres, J. M. (2020). Economic policy uncertainty spillovers in booms and busts. Oxford Bulletin of Economics and Statistics, 82(1), 125-155.
  • Condillac, A. (1798). Le Commerce Et Le Gouvernement. Paris: C. Honel, an vi.
  • Fontaine, I., Razafindravaosolonirina, J., and Didier, L. (2018). Chinese policy uncertainty shocks and the world macroeconomy: Evidence from STVAR. China Economic Review, 51, 1-19.
  • Guglielminetti, E. (2013). The effects of uncertainty shocks on the labor market: A search approach. online] http://econ. sciences-po. fr/sites/default/files/Elisa. pdf.
  • Lawson, T. (1988). Probability And Uncertainty In Economic Analysis. Journal Of Post Keynesian Economics, 6(1), 38-65.
  • Polat, M. A. (2020). The effects of economic and political uncertainties on youth unemployment in Greece: An empirical analysis. Journal of Management and Economics Research, 18(2), 128-148.
  • Yalcinkaya, T. (2004). The Perception of Risk and Uncertainty to Economic Behaviors. Mugla University FEAS Discussion Papers (p. 5-10). Mugla: Mugla University.

G-7 ÜLKELERİNDE EKONOMİ POLİTİKA BELİRSİZLİĞİ İNDEKSİ VE İŞSİZLİK ORANI ÜZERİNE FOURİER FONKSİYONLU BİR PANEL EŞBÜTÜNLEŞME TESTİ

Year 2022, Volume: 10 Issue: 2, 130 - 138, 29.12.2022

Abstract

Belirsizlik, günlük hayatın hemen her alanında görülebilen bir olgudur. Ekonomideki karar birimleri, belirsizliğin artması durumunda kararlarının sonuçlarını tahmin edemezler. Ekonomik hayatta görülebilecek belirsizlik durumları, ortaya çıkabilecek bir ekonomik şoka ve bu şokun beklenmeyen sonuçlarına neden olabilir. Küreselleşen Dünya’da gerçekleşen salgınlar, savaşlar ve savaş sonrasında veya esnasında uygulanan yaptırımlar ekonomik ve siyasi belirsizliklere sebep olmaktadır. Belirsizlik altında alınan kararlar, gelecekteki oluşacak durumlar öngörülemediği için ekonomik ajanları daha temkinli hareket etmeye yönlendirmektedir. Bu temkinli davranışlar, üretim ve tüketimi ilgilendiren istihdam konusunda sorunlara başka bir ifadeyle işsizlik problemine yol açmakta, hanehalklarının gelirlerinin azalmasına ve dolayısıyla yatırım-tasarruf oranlarının düşmesine sebebiyet vermektedir. Bu yüzden belirsizliklerin ekonomi göstergeler üzerindeki etkisinin incelenmesi piyasada etkinliğin ve verimliliğin sağlanması açısından önemlidir. Bu çalışmanın amacı da G-7 ülkeleri için 1996-2022 dönemini kapsayan çeyreklik verilerle ekonomi politika belirsizliği indeksi ve işsizlik oranı arasındaki uzun dönemli ilişkinin varlığının sınanmasıdır. Bu amaç doğrultusunda doğrusal olmayan, yapısal kırılmaları ve yatay kesit bağımlılığını dikkate alan yeni nesil bir test olan panel fourier eşbütünleşme testi uygulanmıştır. Analiz sonucunda G-7 ülkelerinin her birinde ekonomi politika belirsizliği indeksi ve işsizlik oranı arasında uzun dönemli bir ilişki tespit edilmiştir. Bu yüzden iktisat politikalarında belirsizliğin yaşanılmaması işsizlik oranı içi de önem arz etmektedir.

References

  • Alada, A. D. (2000). Economic Philosophy and Uncertainty. Istanbul: Context Publications.
  • Alada, A. D. (1988). İktisatta Belirsizlik Anlayışı Üzerine Notlar . ODTÜ Gelişme Dergisi, 184-185.
  • Al-Thaqeb, S. A., Algharabali, B. G., and Alabdulghafour, K. T. (2020). The pandemic and economic policy uncertainty. International Journal of Finance & Economics.
  • Bernanke, B. S. (1983). Irreversibility, uncertainty, and cyclical investment. The quarterly journal of economics, 98(1), 85-106.
  • Bloom, N. (2009). The impact of uncertainty shocks. Econometrica, 77(3), 623-685.
  • Caggiano, G., Castelnuovo, E., and Groshenny, N. (2014). Uncertainty shocks and unemployment dynamics in US recessions. Journal of Monetary Economics, 67, 78-92.
  • Caggiano, G., Castelnuovo, E., and Figueres, J. M. (2017). Economic policy uncertainty and unemployment in the United States: A nonlinear approach. Economics Letters, 151, 31-34.
  • Caggiano, G., Castelnuovo, E., and Figueres, J. M. (2020). Economic policy uncertainty spillovers in booms and busts. Oxford Bulletin of Economics and Statistics, 82(1), 125-155.
  • Condillac, A. (1798). Le Commerce Et Le Gouvernement. Paris: C. Honel, an vi.
  • Fontaine, I., Razafindravaosolonirina, J., and Didier, L. (2018). Chinese policy uncertainty shocks and the world macroeconomy: Evidence from STVAR. China Economic Review, 51, 1-19.
  • Guglielminetti, E. (2013). The effects of uncertainty shocks on the labor market: A search approach. online] http://econ. sciences-po. fr/sites/default/files/Elisa. pdf.
  • Lawson, T. (1988). Probability And Uncertainty In Economic Analysis. Journal Of Post Keynesian Economics, 6(1), 38-65.
  • Polat, M. A. (2020). The effects of economic and political uncertainties on youth unemployment in Greece: An empirical analysis. Journal of Management and Economics Research, 18(2), 128-148.
  • Yalcinkaya, T. (2004). The Perception of Risk and Uncertainty to Economic Behaviors. Mugla University FEAS Discussion Papers (p. 5-10). Mugla: Mugla University.
There are 14 citations in total.

Details

Primary Language English
Journal Section Articles
Authors

Cihan Usta 0000-0001-8790-9505

Türker Şimşek 0000-0001-7581-7590

Publication Date December 29, 2022
Acceptance Date November 21, 2022
Published in Issue Year 2022 Volume: 10 Issue: 2

Cite

APA Usta, C., & Şimşek, T. (2022). A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES. Journal of International Management Educational and Economics Perspectives, 10(2), 130-138.
AMA Usta C, Şimşek T. A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES. Journal of International Management Educational and Economics Perspectives. December 2022;10(2):130-138.
Chicago Usta, Cihan, and Türker Şimşek. “A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES”. Journal of International Management Educational and Economics Perspectives 10, no. 2 (December 2022): 130-38.
EndNote Usta C, Şimşek T (December 1, 2022) A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES. Journal of International Management Educational and Economics Perspectives 10 2 130–138.
IEEE C. Usta and T. Şimşek, “A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES”, Journal of International Management Educational and Economics Perspectives, vol. 10, no. 2, pp. 130–138, 2022.
ISNAD Usta, Cihan - Şimşek, Türker. “A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES”. Journal of International Management Educational and Economics Perspectives 10/2 (December 2022), 130-138.
JAMA Usta C, Şimşek T. A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES. Journal of International Management Educational and Economics Perspectives. 2022;10:130–138.
MLA Usta, Cihan and Türker Şimşek. “A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES”. Journal of International Management Educational and Economics Perspectives, vol. 10, no. 2, 2022, pp. 130-8.
Vancouver Usta C, Şimşek T. A PANEL COINTEGRATION TEST WITH A FOURIER FUNCTION ON ECONOMIC POLICY UNCERTAINTY INDEX AND UNEMPLOYMENT RATES IN G-7 COUNTRIES. Journal of International Management Educational and Economics Perspectives. 2022;10(2):130-8.