Persistency of Output Fluctuations: The Case of Turkey

Abstract

According to the conventional view, fluctuations in real gross national product (GNP) represent temporary changes of economic output from its long-term trend that treats real GNP as a trend stationary rather than unit root process. Examination of this conventional view is crucial since the properties of the fluctuations has an important role in estimation, forecasting and consequently for the evaluation of the economic relationships. The aim of this study is to investigate the persistency of output fluctuations in Turkey. For this purpose two widely used methods are applied. One of them uses parametric approach for measuring the persistency and the other uses non-parametric approach. Results of these two approaches show that fluctuations of output are not transitory completely as it was presumed by conventional macroeconomic view.