The Determinants of Private Consumption Expenditures: An Application for Turkish Economy

The aim of this study is to investigate the determinants of private consumption for Turkey's economy in 2000: 3 2020: 2 with quarterly data. Within the scope of the study, the course of private consumption expenditures over the years and its contribution to economic growth were given. The stationarities of the variables in the model have been tested with traditional unit root tests and Fourier unit root tests. According to unit root test results, series have unit root hence, long-term relationships between series were examined by Fourier-Shin cointegration test and ARDL bounds test approach. Cointegration test results reveal that the series move together in the long term. According to the ARDL bounds test, the GDP variable and the series reflecting the net change in assets positively affected private consumption expenditures as expected. A 1% increase in GDP increases private consumption expenditures by 0.61%. As expected in theory, the increase in interest rates reduces private consumption expenditures. However, the magnitude of the effect was relatively small. The inflation variable, which represents the economy's uncertainty, negatively affects private consumption expenditures. A 1% increase in inflation rates causes a 0.59% decrease in private consumption expenditures. Public expenditures affect private consumption expenditures negatively. 1% increase in public expenditures reduces private consumption expenditures by 0.34 %. This result shows a partial Ricardian equivalence is valid for Turkey.