Inflation, Urbanization, and Ruralization in Turkey: How They are Related in the Long-run?

Abstract

This study examine the short-run and long-run relationship between inflation and urbanization and ruralization rates in Turkey by using a data set for the years between 1960 and 2022 and estimation method of ARDL. Stationarity test findings disclose that urbanization rate is integrated order one while economic growth, inflation, and ruralization rate are integrated order zero. Co-integration test findings gathered from ARDL bound test hint that there is co-integrating relationship among variables of economic growth, inflation, ruralization rate, and urbanization rate. Considering to long-run coefficient estimations, ruralization rate and economic growth have negative and statistically significant coefficients for the first model. In other words one percent increase in ruralization rate induces to a decrease in consumer price index by 17.168 percent. Also one percent rise in economic growth causes to a drop in consumer price index by 0.995 percent. For the second model, we obtained statistically significant positive coefficient estimation for urbanization rate and negative one for economic growth. More spesifically, if urbanization rate goes up by %1 then consumer price index increases by %19.427 whereas %1 increase in economic growth lessens consumer price index by %0.947.