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The Effect of Uncertains in European Economic Policies on the BIST 100 Index

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  • Saffet Akdağ
  • Hakan Yıldırım

Abstract

Uncertainties are one of the factors affecting investors' investment decisions. In accordance with the wait-and-see policy, which is the best option for investors in an uncertain environment, investors can postpone their investment and consumption decisions. Uncertainties especially in economic policies affect investors' decisions more deeply. In this context, the goal of this study is to test the effect of European Economic Policy Uncertainty (EPU) index, which represents uncertainties in economic policies of European countries, on BIST 100 index by Vector Error Correction Model (VECM), Johansen Cointegration and cointegration coefficient estimator FMOLS and DOLS. Monthly data between February 1988 and May 2019 were used in this study. Findings of the study, it was reached that there was a long-run interaction between EPU and BIST 100 index and the increases in the EPU index had a negative effect on the BIST 100 index. In addition, one-way causality relationship was determined from the change in EPU index to the change in BIST 100 index.

Suggested Citation

  • Saffet Akdağ & Hakan Yıldırım, 2021. "The Effect of Uncertains in European Economic Policies on the BIST 100 Index," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 6(2), pages 322-331.
    • Handle: RePEc:ahs:journl:v:6:y:2021:i:2:p:322-331
    DOI: 10.30784/epfad.857796
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Economic Policy Uncertainty Index; BIST 100 Index; Causality Analysis; Cointegration Analysis; FMOLS and DOLS;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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