The Relationship between Poverty and Inflation and Interest in Turkey

Abstract

Poverty is a socioeconomic problem that appears in different dimensions in all societies. When the historical background of the concept is examined, it is seen that it was initially defined as a state of deprivation of basic needs. However, the needs of man, who is a social being, are constantly updated with the changing world. Therefore, the definition of poverty is reshaped day by day within the dynamism of the socioeconomic structure. Accordingly, the factors that cause poverty also change in line with the needs. Today, there are many socioeconomic factors that cause poverty. These factors may vary according to the level of development of societies. In countries such as Turkey, the phenomenon of poverty is shaped especially on the axis of economic factors. The distortive effects of these factors on expenditure, consumption and income distribution directly and deeply affect the poor living in that society. This study aims to analyse the relationship between inflation and interest rates, which are among the macroeconomic factors that cause poverty, and poverty. In this context, firstly, the conceptual framework of the variables is drawn. Then, Granger Causality Test and Engle-Granger Cointegration Test were applied to the variables in order to determine the relationship between poverty, interest and inflation rates of Turkey for the period 2006-2022. The findings of the study show that there is a cointegration relationship between poverty, inflation and interest rates and that these variables move together in the long run. Regarding the causality relationship of the variables, a causality relationship was found between interest rate and poverty.