Structural Modelling for North Cyprus’ Economic Growth

This study aim is to explain relationship between the economic growth, consumption and the governmental investment spending with using yearly North Cyprus data between the period of 1985 and 2008. The available data from State Planning Organization which is an agent of Prime Ministry of Turkish Republic of Northern Cyprus (TRNC) is most of the data ending in 2008. The model fit the data well enough and the marks are consistent with the equilibrium relationship derived from the neo-classical economic theory that is increases both in whether public or private consumption and investment cause GDP growth by some multiple. Theoretically, if a country government spending more it is possible to bring more economic growth. Thus, it is possible to North Cyprus to reaching a high level of economic growth, so governments are not able to accomplish their promises completely that they gave before elections. Fundamentally, a country income could be increased by raising the public and the private investment and consumption. However, the precise amount of such growth by consumption and investment that desire by government to serve the best to the country, this can only reached by if the necessary parameters are identified and counted which they are provided the desired level of economic growth; as a result, in this study this done by applied econometric analysis of economic growth. This study aim is to summarize a model for incorporate a forecast with a structural model. The method of forecast is to combine the future participation from the data that consist with the model. It assumed that the model is enough for provide a future forecast for economic growth and this would be the case for this study. The method for generating a model trusted on the short data period. Because, it would be assumed that short data provide more consisted and robust result for Forecast of economic growth