TY - JOUR
T1 - Investment expenditure and capital accumulation in an inflationary environment
T2 - The case of Turkey
AU - Günçavdi, Öner
AU - Küçük, Ali Erhan
PY - 2013/7
Y1 - 2013/7
N2 - The empirical results of the paper show that the private fixed capital accumulation in Turkey is constrained by the demand constraint and the availability of financial resources. The significance of the liquidity variable clearly points out that credit policy and accommodating monetary policy with the lower rates of interests must be the essential elements of economic policies that revive investment in Turkey. It seems from the empirical results that the cost of capital has a significant but discouraging effect on investment expenditure. With this empirical finding it also becomes evident that fiscal stimuli would work in stimulating private investment, they must be the essential components of an investment programme in Turkey. In regard with the purpose of this paper, the variable, namely the willingness-to-invest, that is expected to capture the perception of investors on investment climate, also appears to be significant factors for the overall sample period. Interestingly, the speed of adjustment of private investment from disequilibrium is fairly slow. This is because there may be some frictions (such as heavy tax burden) and/or some structural constraints (e.g. insufficient infrastructure and inadequate legislative structure) in the economy causing this slow down. In reviving private investment, especially in the long run, one must pay attention to the importance of these factors, and appropriate government actions have to be taken.
AB - The empirical results of the paper show that the private fixed capital accumulation in Turkey is constrained by the demand constraint and the availability of financial resources. The significance of the liquidity variable clearly points out that credit policy and accommodating monetary policy with the lower rates of interests must be the essential elements of economic policies that revive investment in Turkey. It seems from the empirical results that the cost of capital has a significant but discouraging effect on investment expenditure. With this empirical finding it also becomes evident that fiscal stimuli would work in stimulating private investment, they must be the essential components of an investment programme in Turkey. In regard with the purpose of this paper, the variable, namely the willingness-to-invest, that is expected to capture the perception of investors on investment climate, also appears to be significant factors for the overall sample period. Interestingly, the speed of adjustment of private investment from disequilibrium is fairly slow. This is because there may be some frictions (such as heavy tax burden) and/or some structural constraints (e.g. insufficient infrastructure and inadequate legislative structure) in the economy causing this slow down. In reviving private investment, especially in the long run, one must pay attention to the importance of these factors, and appropriate government actions have to be taken.
KW - Fuzzy set theory
KW - Private fixed capital accumulation
KW - Turkey
KW - Willingness to invest
UR - http://www.scopus.com/inward/record.url?scp=84878925424&partnerID=8YFLogxK
U2 - 10.1016/j.jpolmod.2012.04.003
DO - 10.1016/j.jpolmod.2012.04.003
M3 - Article
AN - SCOPUS:84878925424
SN - 0161-8938
VL - 35
SP - 554
EP - 571
JO - Journal of Policy Modeling
JF - Journal of Policy Modeling
IS - 4
ER -