Impact of Unemployment, Wages and Inflation on the Increase of Trade and Growth

In this study, annual time series data is utilized to estimate the effects of unemployment, wages and inflation on the enlargement of trade and growth for Turkey between 1985 and 201. Calculations show that OLS results can be spread and considered for a selected sample period where the results indicate that devaluing the Turkish lira had a limited contribution on the Turkish trade regime. According to the Johansen cointegration test results for CPI and Unemployment, there is a long-run relationship, which reaches equilibrium in the long run. However, the effect of inflation and unemployment on trade enlargement is not significant and did not make a contribution in making Turkish producers become competitive in international markets. The null hypothesis is rejected, where the probability value (0.0005) is lower than the test critical value (0.05) and cointegration equation considered for the none, where its maximum eigenvalue statistics become 37.53419 and 21.35766 and its critical value is 40.17493 for 0.05. As in the tests, the observed cointegration is realised. This means that, between the considered variables GDP, CPI, wages and unemployment, there is a long run relationship, which reaches equilibrium for the considered period(see table 10)