THE RELATIONSHIP BETWEEN PUBLIC INVESTMENT AND EMPLOYMENT IN TURKEY: A TODA-YAMAMOTO APPROACH

Public spending has significant economic effects and is crucial for countries' economic activities. It is employed as an effective fiscal policy instrument, impacting both the supply and demand sides of the economy. High unemployment poses a major macroeconomic challenge, affecting developed and developing countries with negative socioeconomic consequences. To address this, governments prioritise economic activity that boosts employment and creates various programs. Public spending, particularly in capital expenditure and public investment, is critical in expanding national economic activity and employment. However, the relationship between public spending and employment is still debated. This study investigates the causal relationship between public investment and employment in Turkey from 1992 to 2021. The Toda-Yamamoto causality test shows that public investment and employment have a bidirectional causality, demonstrating a feedback relationship between the two variables