Abstract
THE IMPACT OF INCOME INEQUALITY ON ECONOMIC GROWTH UNDER STRUCTURAL BREAKS IN TURKEY
Income inequality and economic growth are two important issues, which are discussed in the economic literature. In this study, the effect of income inequality on economic growth in the 1987-2018 period are analyzed for Turkey's economy. For this purpose, the relationships between variables are investigated using ARDL boundary test with structural break. In addition, causality relationships between income inequality and economic growth are determined by the Granger Causality test based on the Error Correction Model. According to the results of the ARDL bounds test results are significant cointegration between income inequality and economic growth. Income inequality negatively affects economic growth in the long run. In addition, it is seen that the dummy variables of 2001 and 2008 in the model negatively affect economic growth. According to the causality test result, there is a causality relationship from income inequality to economic growth, both in the short run and the long run. Policies aimed at reducing income inequality have a positive impact on economic growth performance in the long run. Finally, the economic implications made about Turkey's economy is also included in the study to future policy recommendations.
Keywords
Economic Growth, Income Inequality, Economic Crisis, Structural Break, ARDL Bounds Test
