Economic Confidence Index and Economic Growth Relationship: Prediction with Artificial Neural Networks in the Case of Turkey

Year 2021, Volume: 17 Issue: 36, 2490 - 2517, 30.04.2021

Emek Aslı Cinel , Ufuk Yolcu

https://doi.org/10.26466/opus.885417

Cited By: 2

Abstract

Ekonomik Güven Endeksi ve Ekonomik Büyüme İlişkisi: Yapay Sinir Ağları ile Türkiye Örneği Öngörüsü

Abstract

Abstract
It is inadequate to evaluate merely basic macroeconomic indicators to speak of economic growth. Economic growth is also related to external factors. One of these factors is the sentiment of confidence. Economic confidence is associated with expectations. Consumers, producers, savers, and laborers make their economic decisions according to their expectations and affect the economy. In this context, the rise in confidence in the economy positively affects consumption and production decisions, and economic growth is achieved. The study aimed to investigate the relationship between economic confidence and economic growth in Turkey. For this purpose, the economic confidence index data obtained from the official website of TSI over the period 2007-2020 were utilized. The overall situation of the economy was evaluated by considering the data of these index values. As a result of the study, it was observed that the economic growth slowed down in the pessimistic situation where the confidence in the economy decreased, whereas the economic growth boosted in the optimistic situation where the confidence in the economy increased. Moreover, within the scope of this study, both annual and quarterly changes in the Gross Domestic Product, a measurement of economic growth, were predicted with different artificial neural networks (ANNs) over the period 2007 – 2020. Throughout the prediction process, the time-series of economic confidence index with monthly data observed within the same period were included in the inputs of the neural network as the auxiliary variable. The results indicated that artificial neural networks performed successfully in predicting the time-series for economic growth and this situation was based on the relationship between economic growth and economic confidence index.

Keywords

Confidence, Economic growth, Turkey

References

• Aarle, B. and Kappler, M. (2012). Economic sentiment shocks and fluctuations in economic activity in the Euro area and the USA. Intereconomics: Review of European Economic Policy, 47(1), 44-51.
• Arısoy İ. (2012). Türkiye ekonomisinde iktisadi güven endeksleri ve seçilmiş makro değişkenler arasındaki. İlişkilerin VAR analizi. Maliye Dergisi, 162, 305-315.
• Aydın, M. and Turan, Y. E. (2019). Türkiye’de ekonomik güven büyümeyi etkiliyor mu? RALS birim kök ve eşbütünleşme yaklaşımı. Ekoist: Journal of Econometrics and Statistics, 32, 1-16.
• Aytekin, İ. and Doyar, B. V. (2019). Türkiye’de döviz kuru dalgalanmalarının sanayi üretimi ve tüketici güveni üzerindeki etkisi: 2008-2019. Uluslararası Bilimsel Araştırmalar Kongresi, Gölbaşı - Adıyaman, 913-923.
• Başarır, Ç., Bicil, İ. M. and Yılmaz, Ö. (2019). The relationship between selected financial and macroeconomic variables with consumer confidence ındex. Journal of Yaşar University, 14, 173-183.
• Beşel, F. and Yardımcıoğlu, F. (2016). Tüketici güven endeksi ile makro değişkenler arasındaki ilişki, Uluslararası Politik, Ekonomik ve Sosyal Araştırmalar Kongresi Bildiriler Kitabı, 475-487.
• Boulila, G., Bousrih, L. and Trabelsi, M. (2008). Social capital and economic growth: empirical investigations on the transmission channels. International Economic Journal, 22(3), 399-417.
• Chuku, C., Oduor, J. and Simpasa, A. (2017). Intelligent forecasting of economic growth for African Economies: Artificial neural networks versus time series and structural econometric models. Washington Research Program on Forecasting, 1-28.
• Çelik, S., Aslanoğlu, E. and Uzun, S. (2010). Determinants of consumer confidence in emerging economies: a panel cointegration analysis. Topics in Middle Eastern and African Economies, 12, 1-19.
• Çoban, H. and Balıkçıoğlu, E. (2020). Güven, inovasyon ve ekonomik büyüme ilişkisi. Maliye Araştırmaları Dergisi, 6(3), 1-16.
• Demirgil, B. (2019). Ekonomik büyümede güven faktörünün etkisi: Türkiye örneği. Avrasya Sosyal ve Ekonomi Araştırmaları Dergisi, 6(3), 155-163.
• Düzgün, R. (2008). A comparison of artificial neural networks and ARIMA models success in GDP forecast. Marmara Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 25(2), 165-176.
• Elman, J. (1990). Finding structure in time. Cognitive Science, 14, 179- 211.
• Golinelli, R., and Parigi, G. (2004). Consumer sentiment and economic activity. Journal of Business Cycle Measurement and Analysis, 2, 147-170.
• Gürgür, T. and Kılınç, Z. (2015). What drives the consumer confidence in Turkey? Research Notes in Economics, 17, 1-13.
• İbicioğlu, M., Kapusuzoğlu, A. and Karan, M. (2013). Türkiye’deki tüketici güven endeksi ile döviz kuru arasındaki ilişkinin ampirik analizi. İşletme Araştırmaları Dergisi, 5(1), 5-16.
• Ibrahim, A., Bawa, S., Abdullahi, I.S., Digigu, C. E. and Mainasara, S. (2015). Consumer confidence indicators and economic fluctuations in Nigeria. CBN Journal of Applied Statistics, 6(1), 285-300.
• Islam, T. and Mumtaz, M. (2016). Consumer confidence index and economic growth: an empirical analysis of EU countries. EuroEconomica, 2(35), 17-22.
• Jahn, M. (2018). Artificial neural network regression models: predicting GDP growth. Hamburg Institute of International Economics, 185, 1-15.
• Junoh, M. Z. H. M. (2004). Predicting GDP growth in Malaysia using knowledge – based economy indicators: a comparison between neural network and econometric approach. Sunway College Journal, 1, 39- 50.
• Kasmaqui, K., Mughal, M. and Bouoiyour, J. (2018). Does trust influence economic growth? evidence from the Arab world. Economics Bulletin, 38(2), 880-891.
• Knack, S. and Keefer, P. (1997). Does social capital have an economic payoff ?. Quarterly Journal of Economics, 112, 1251-1288.
• Levenberg, K. (1944). A method for the solution of certain non- linear problems in least squares. The Quarterly of Applied Mathematics, 2(2), 164-168.
• Ludvigson, S.C. (2004), Consumer confidence and consumer spending. Journal of Economic Perspectives, 18, 29–50.
• Matsusaka, J. and Sbordone, A. (1995). Consumer confidence and economic fluctuations. Economic Inquiry, 33(2), 296-318.
• Mazurek, J. and Mielcova, E. (2017). Is consumer confidence index a suitable predictor of future economic growth? an evidence from the USA. E+M: Ekonomie a Management, 20(2), 30-46.
• Özsağır, A. (2007). Ekonomide güven faktörü. Elektronik Sosyal Bilimler Dergisi, 6, 46-62.
• Öztürk, M. (2020). Türkiye’de güven endeksleri ve ekonomik büyüme ilişkisi. Article in The Journal of Turk-Islam World Social Studies, 7(25), 59-79.
• Pasarica, A. E. and Popescu, M. (2015). Prediction of the GDP of Romania using neural networks. Interdisciplinary Approaches Between Traditional and Modern Methods Nord 1 International Conference, Romania.
• Pedroni, P. (1999). Critical values for cointegration tests in heterogeneous panels with multiple repressors. Oxford Bulletin of Economics and Statistics, 61, 653–678.
• Pedroni, P. (2004). Panel cointegration; asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20(3), 597-625.
• Rumelhart, E., Hinton, G. and Williams, R. (1986). Learning Internal Representations by Error Propagation in: The M.I.T. Press. Cambridge, 318–362.
• Söyler, H. and Kızılkaya, O. (2015). Türkiye’nin GSYH tahmini için yapay sinir ağları model performanslarının karşılaştırılması. Cumhuriyet Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 16(1), 45-58.
• Toda, H. and Yamamoto, T. (1995). Statistical inference in vector autoregressions with possibly integrated processes. Journal of Econometrics, 66(1-2), 225-250.
• TSI (2020). Statictics data protal. Retrieved from https://data.tuik.gov.tr/Kategori/GetKategori?p=ekonomik-guven- 117anddil=1 on 01.30.2020.
• Tunalı, H. and Özkan, İ. (2016). Türkiye’de tüketici güven endeksi ve tüketici fiyat endeksi arasındaki ilişkinin ampirik analizi. İktisat Politikası Araştırmaları Dergisi, 3(2), 53-66.
• Türkan, E. (2001). Türkiye’de 2001 krizi ve güven faktörü. Yeni Türkiye Dergisi, Ekonomik Kriz Özel Sayısı, 7(41). 1.
• Utaka, A. (2003). Confidence and real economy- the Japanese case. Applied Economics, 35(3), 337-342.
• Vergil, H. and Bahtiyar, B. (2017). Ekonomik büyüme farklılıklarının açıklanmasında sosyal sermayenin etkisi: güven düzeyi üzerinden karşılaştırmalı bir analiz. Uluslararası Yönetim İktisat ve İşletme Dergisi, 13(3), 673-686.
• Vrbka, J. (2016). Predicting future GDP development by means of artificial intelligence. Littera Scripta, 9(3), 154-167.
• Werbos, P.J. (1974). The roots of backpropagation. John Wiley and Sons, New York.
• Westerlund, J. (2007). Testing for error correction in panel data. Oxford Bulletin of Economics and Statistics, 69(6), 709-748.
• Westerlund, J. and Edgerton, D. (2007). A panel bootstrap cointegration test. Economics Letters, 97(3), 185-190.
• Zak, P. and Knack, S. (2001). Trust and growth. Economic Journal Royal Economic Society, 111(470), 295-321.
• Zanin, L. (2010). The relationship between changes in the economic sentiment indicator and real GDP growth: A time-varying coeffcient approach. Economics Bulletin, 30(1), 837-846.