The Relationship between Openness and Unemployment: A Time Varying Parameter Analysis on Turkey

Authors : Ramazan Ekinci, Osman Tüzün, Fatih Ceylan, Hakan Kahyaoğlu

Pages : 45-74

Doi:10.17233/sosyoekonomi.281854

View : 25 | Download : 14

Publication Date : 2017-01-29

Article Type : Research

Abstract :Spreading the shocks to country economies appears from two channels with the globalization process. These channels are the transmission channels of trade and finance. These two mechanisms generated effects simultaneously on country economies after the 2007-2008 global crisis. Simultaneous effects started a process emerging as a decline in economic growth and an increase in the unemployment rate. Generally, the measures taken against these process have been implemented as monetary expansion (Quantative easing-QE) policies, however the countries, which particularly EU countries that not carrying out common fiscal policy, fall into liquidty trap in the sense that the effects of as mentioned policies usually expose to a time varying unemployment process. Therefore, in this study by using a time varying parameter techniques the responses of the unemployment rates to openness levels will analyze. In the periods of 2011Q1-2015Q4 by using a time varying parameter VAR (TVP-VAR) method developed by Nakajima (2011), what extent the unemployment rates are affected from the openness level of the countries will be analyzed and the policy suggestions will be developed.
Keywords : Openness Rate, Unemployment Rate, TVP-VAR