The Interaction Between Economic Uncertainties and Financial Cycles in Türkiye: Frequency Domain Symmetric and Asymmetric Causality Analysis

Authors : Ayşegül Şahin

Pages : 484-501

Doi:10.30784/epfad.1666589

View : 116 | Download : 68

Publication Date : 2025-06-30

Article Type : Research Paper

Abstract :This study analyzes the impact of the Turkish Economic Uncertainty Index on financial cycles with monthly data for the period 2010:01–2024:12. Financial cycles are represented by a composite index formed by indicators such as banking spread, real housing prices, and the BIST100 index. In order to examine the relationship at the short-, medium-, and long-term levels, Breitung and Candelon (2006) applied a frequency domain symmetric and asymmetric causality test. The findings show that decreases in economic uncertainty significantly affect the positive component of financial cycles in both the short and long term. On the other hand, it was found that the economic uncertainty index tended to decrease in the short term during financial contraction periods. The results indicate that reducing uncertainties not only provides market confidence but also supports persistent financial expansion processes. The study makes an original contribution to the literature by revealing for the first time the impact of policy uncertainty on financial cycles on a frequency-based basis through the asymmetric effect channel.
Keywords : Ekonomik Politika Belirsizliği, Finansal Çevrimler, Simetrik ve Asimetrik Nedensellik

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