TESTING THE VALIDITY OF OKUN’S LAW IN THE TURKISH ECONOMY: INSIGHTS FROM FOURIER-BASED ECONOMETRIC METHODS
BURSA 7th INTERNATIONAL CONFERENCE ON HUMANITY and SOCIAL SCIENCES, Bursa, Turkey, 3 - 05 July 2026, pp.258-266, (Full Text)
- Publication Type: Conference Paper / Full Text
- City: Bursa
- Country: Turkey
- Page Numbers: pp.258-266
- Çanakkale Onsekiz Mart University Affiliated: Yes
Abstract
This paper investigates the validity of Okun’s Law in the Turkish economy, which posits an inverse relationship between economic growth and unemployment. Utilizing annual data from the World Bank database covering the period from 1988 to 2024, the research employs real GDP per capita and the total unemployment rate (% of total labor force) as the primary variables. To address the complexities of the Turkish macroeconomic environment, the analysis utilizes the Fourier Cointegration Test and the Fourier Unit Root Test. These advanced econometric methods are particularly suitable for capturing structural breaks and non-linearities within the data series.
The originality of this paper lies in its comprehensive examination of the Turkish economic landscape following the post-1980s shift toward liberal economic policies. This timeframe encompasses significant domestic and global crises that have profoundly influenced the labor market and growth dynamics. By accounting for these turbulent periods, this research provides a nuanced evaluation of whether the traditional Okun coefficient remains statistically significant in the face of persistent structural volatility. Ultimately, the findings are expected to offer critical insights into the resilience of the unemployment-growth nexus in Turkey, contributing to both the empirical literature on emerging markets and the broader debate regarding the applicability of conventional macroeconomic theories in developing economies.