This paper investigates the determinants of income distribution in Turkey. Gini coefficient is used for income distribution, the ratio of trade volume to GNP and budget deficit to GNP are used for trade openness and fiscal policy, respectively; and Wholesale Price Index (WPI) is used for inflation. Gini coefficients are obtained from UTIP and the other data gathered from the TURKSTAT. This data is utilized to investigate the determinants of income distribution econometrically. ARDL bound testing approach used in this study, has become popular recently, because this time series method has some advantages over the others. The econometric results suggest that economic growth and trade openness improve income distribution while inflation worsens it and budget deficit is statistically insignificant for 1963-1998 periods. The effect of economic growth in the short run is negative but the long run effect turns out to be positive. The impact of trade openness on income distribution is negligible. The limited impact of economic growth for these years implies that the other factors affecting income distribution negatively have been dominant. For this reason, the findings of this study show that simple suggestions to improve income distribution in Turkey are meaningless. Improving income distribution requires important structural transformations in the Turkish Economy.
Key words: Turkey, Income Distribution, Growth, Inflation, Trade openness, ARDL Article Language: EnglishTurkish
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