The Analysis of Ecological Deficit, Economic Growth and Private Sector Credits Based on Fourier Unit Root Tests: The Case of Turkey

Abstract

This study aims to investigate the sustainability of three different variables – ecological deficit, economic growth, and private sector credits – that have an important role for the examination of the infrastructure of economic processes. In this direction, the sustainability of those variables in the Turkish economy has been analyzed through linear – ADF and KPSS – and non-linear – Fourier ADF, Fourier KPSS, Fourier GLS – unit root tests for three different periods covering
1987-2007 (pre-global crisis), 2008-2017 (global crisis), and 1987-2017 (whole period). The empirical findings show that the series of ecological deficit and economic growth are stationary at the level and the private sector credit is stationary at first difference within the framework of traditional/linear unit root tests. In addition, the test statistics of the series in sub-periods provides that the series are to a large extent stationary at the level in the presence of the implication of
Fourier-type non-linear unit root tests, whereas the test statistics of whole periods emphasize that economic growth and private sector credits tend to return to the average at the first difference, contrary to the ecological deficit in which it is stationary at the level.