IDEAS home Printed from https://ideas.repec.org/a/eas/econst/v22y2022i22p14-33.html
   My bibliography  Save this article

The Relationship Between The Velocity Of Circulation Of Money And Growth In Turkish Economy

Author

Listed:
  • Havva KOÇ

    (Trakya Ãœniversitesi)

  • Ayhan UÇAK

    (Trakya Ãœniversitesi)

Abstract

Although there is no common consensus among economists, the velocity of money is used as a measure to measure the overall health and dynamism of an economy. While some economists claim that any change in money supply can directly affect the rate of circulation of money and inflation, others argue that the connection between money supply and rate of circulation of money is rather weak. The motivation of this study is the question of how the velocity of money affects Real GDP, which is a measure of macroeconomic performance, and how the variables determined as macroeconomic performance measures affect the velocity of money. The answer to this question has been sought in econometric analysis. For the Turkish economy, four variables were obtained with quarterly data between the years 2006-2019. These are Real GDP, Inflation, M1 money supply and V1, which is the velocity of circulation of money. According to the model result in which real GDP is included as the dependent variable and the velocity of circulation of money is selected as the independent variable; There is a positive relationship between real GDP and the velocity of money in the same direction. According to the result of the model in which the variables selected for macroeconomic performance are taken independently and the velocity of money is taken as the dependent variable; There is a positive relationship between real GDP and the velocity of money in the same direction. A positive correlation was found between the inflation variable and the circulation rate in the same direction. There is an inverse negative relationship between the M1 money supply and the velocity of circulation.

Suggested Citation

  • Havva KOÇ & Ayhan UÇAK, 2022. "The Relationship Between The Velocity Of Circulation Of Money And Growth In Turkish Economy," Eurasian Eononometrics, Statistics and Emprical Economics Journal, Eurasian Academy Of Sciences, vol. 22(22), pages 14-33, March.
    • Handle: RePEc:eas:econst:v:22:y:2022:i:22:p:14-33
    DOI: 10.17740/eas.stat.2022-V22-02
    as

    Download full text from publisher

    File URL: https://eurasianacademy.org/index.php/econstat/article/view/1100
    Download Restriction: no
    File URL: https://libkey.io/10.17740/eas.stat.2022-V22-02?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    2. repec:syd:wpaper:160 is not listed on IDEAS
    3. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    4. Thomas M. Humphrey, 1993. "The origins of velocity functions," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 1-18.
    5. Gordon, Robert J, 1990. "What Is New-Keynesian Economics?," Journal of Economic Literature, American Economic Association, vol. 28(3), pages 1115-1171, September.
    6. Karfakis, Costas I., 1991. "MONETARY POLICY AND THE VELOCITY OF MONEY IN GREECE: A COlNTEGRATION APPROACH," Working Papers 160, University of Sydney, School of Economics.
    7. Michael Graff, 2008. "The Quantity Theory of Money in Historical Perspective," KOF Working papers 08-196, KOF Swiss Economic Institute, ETH Zurich.
    8. Grimes, Arthur, 1991. "The effects of inflation on growth: some international evidence," MPRA Paper 68526, University Library of Munich, Germany.
    9. Hanson, James S & Vogel, Robert C, 1973. "Inflation and Monetary Velocity in Latin America," The Review of Economics and Statistics, MIT Press, vol. 55(3), pages 365-370, August.
    10. Thomas M. Humphrey, 1974. "The quantity theory of money : its historical evolution and role in policy debates," Economic Review, Federal Reserve Bank of Richmond, vol. 60(May), pages 2-19.
    11. Ozturk, Ilhan, 2002. "Velocity Effect On Inflationary Growth of Turkey: Evidence From Co-integration Analysis and Granger's Causality Test," MPRA Paper 259, University Library of Munich, Germany.
    12. Bryon Higgins, 1978. "Velocity: money's second dimension," Economic Review, Federal Reserve Bank of Kansas City, vol. 63(Jun), pages 15-31.
    13. Mina Baliamoune‐Lutz & Jonathan Haughton, 2004. "Velocity Effects of Increased Variability in Monetary Growth in Egypt: A Test of Friedman's Velocity Hypothesis," African Development Review, African Development Bank, vol. 16(1), pages 36-52.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Satya Paul & Colm Kearney & Kabir Chowdhury, 1997. "Inflation and economic growth: a multi-country empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1387-1401.
    2. Bitros, G.C. & Panas, E.J., 1999. "Another Look at the Inflation-Productivity Trade-Off," Athens University of Economics and Business 114, Athens University of Economics and Business, Department of International and European Economic Studies.
    3. Andres, Javier & Domenech, Rafael & Molinas, Cesar, 1996. "Macroeconomic performance and convergence in OECD countries," European Economic Review, Elsevier, vol. 40(9), pages 1683-1704, December.
    4. Hugo Erken & Piet Donselaar & Roy Thurik, 2018. "Total factor productivity and the role of entrepreneurship," The Journal of Technology Transfer, Springer, vol. 43(6), pages 1493-1521, December.
    5. Palle Andersen & David Gruen, 1995. "Macroeconomic Policies and Growth," RBA Annual Conference Volume (Discontinued), in: Palle Andersen & Jacqueline Dwyer & David Gruen (ed.),Productivity and Growth, Reserve Bank of Australia.
    6. Karl-Heinz Todter & Gerhard Ziebarth, 1999. "Price Stability versus Low Inflation in Germany: An Analysis of Costs and Benefits," NBER Chapters, in: The Costs and Benefits of Price Stability, pages 47-94, National Bureau of Economic Research, Inc.
    7. Cunado, J. & Perez de Gracia, F., 2006. "Real convergence in Africa in the second-half of the 20th century," Journal of Economics and Business, Elsevier, vol. 58(2), pages 153-167.
    8. Esra Soyu Yıldırım & Cuma Demirtaş & Munise Ilıkkan Özgür, 2022. "Causality Relationship Between Economic, Financial, Political Risk and Growth: The Case of Turkey," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(1), pages 165-186, January.
    9. Maparu, Tuhin Subhra & Mazumder, Tarak Nath, 2017. "Transport infrastructure, economic development and urbanization in India (1990–2011): Is there any causal relationship?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 319-336.
    10. J.M. Berk, 1998. "Monetary transmission: what do we know and how can we use it?," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 51(205), pages 145-170.
    11. Singh, Tarlok, 2010. "Does domestic saving cause economic growth? A time-series evidence from India," Journal of Policy Modeling, Elsevier, vol. 32(2), pages 231-253, March.
    12. Palakiyèm Kpemoua, 2016. "Levels Of Education And Economic Performances Of Togo [Niveaux D’Education Et Performances Economiques Du Togo]," Working Papers halshs-01506650, HAL.
    13. Gheorghe Zaman & Zizi Goschin, 2014. "Economic Crisis and Wage Divergence: Empirical Evidence from Romania," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(4), pages 493-513.
    14. Nicholas Apergis & Sophia Eleftheriou, 2000. "Measuring Price Elasticity of Aggregate Demand in Greece: 1961-1995," Public Finance Review, , vol. 28(5), pages 452-467, September.
    15. Bohl, Martin T., 1999. "Testing the Long-Run Implications of the Neoclassical Stochastic Growth Model: A Panel-Based Unit Root Investigation for West German Lander, 1970-1994," Journal of Macroeconomics, Elsevier, vol. 21(1), pages 155-164, January.
    16. Luma Al-Qudah & Barbara Piontek & Judit Olah, 2021. "Economic Growth and Foreign Direct Investment in the Context of Financial Development: Evidence from Jordan," European Research Studies Journal, European Research Studies Journal, vol. 0(2 - Part ), pages 762-782.
    17. Amjad Ali & Marc Audi, 2016. "The Impact of Income Inequality, Environmental Degradation and Globalization on Life Expectancy in Pakistan: An Empirical Analysis," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 4(4), pages 182-193, April.
    18. Jesus Otero & Manuel Ramirez, 2002. "On the determinants of the inflation rate in Colombia: a disequilibrium market approach," Borradores de Investigación 3296, Universidad del Rosario.
    19. repec:ers:journl:v:xxiv:y:2021:i:2b:p:762-782 is not listed on IDEAS
    20. Otero, Jesus & Ramirez, Manuel, 2006. "Inflation before and after central bank independence: The case of Colombia," Journal of Development Economics, Elsevier, vol. 79(1), pages 168-182, February.
    21. Audi, Marc & Ali, Amjad, 2016. "Socio-Economic Status and Life Expectancy in Lebanon: An Empirical Analysis," MPRA Paper 72900, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eas:econst:v:22:y:2022:i:22:p:14-33. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kutluk Kagan Sumer (email available below). General contact details of provider: https://www.eurasianacademy.org/index.php/econstat .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.