The Impact of Irrational Economic Policies on Borsa Istanbul, Interest Rates, and Inflation in Turkey: A Time Series Analysis

Abstract

This study aims to examine the relationship between Borsa Istanbul (BIST), interest rates, and inflation during the period of irrational economic policies from 2018 to 2023. The Johansen Cointegration model (1991, 1995) was employed to investigate the long-term relationship between the variables. Using monthly data, the dynamics between the BIST100 index, interest rates, and inflation were analyzed. The findings of the study indicate that as interest rates and inflation decrease, the BIST100 index tends to rise. This suggests that lower interest rates and inflation stimulate investment and consumption, thereby supporting economic growth. Additionally, a linear relationship between inflation and exchange rates was identified, predicting that the exchange rate would increase at least by the inflation rate.