How is the Industrial Production Index Related to GDP: An Empirical Study for Turkey

Abstract

The aim of this paper is to examine symmetric and asymmetric relationship among sector indexes of industrial production index and gross domestic product (GDP) in Turkey using Engle-Granger cointegration and Enders and Siklos (2001) threshold autoregressive (TAR) and momentum-TAR (M-TAR) models. The production indexes are total industry, energy and manufacturing. It is mainly found that, contrary to Engle-Granger test results, there are short-run and long-run positive correlations among the series considered except energy index. The energy index should be treated separately since its long-run behavior presented no cointegration indicating that its long-run pattern differs from other production indexes and GDP of Turkey.