The Relationship Between Foreign Direct Investments and CDS Premiums in Türkiye: Time-Varying Causality Test (2011-2023)

Abstract

This study econometrically investigates the relationship between FDI and CDS premiums in Türkiye and analyses whether there is a relationship between the monthly frequency data between 2011-2023. In order to determine the relationship between the variables, the stationarity of the variables should be determined first. "Lee and Strazicich (2003)" unit root tests, which take into account structural breaks, were applied to the data. Whether there is causality between the variables, and if there is a causality relationship, the determination of the direction of causality is mutually tested with the "Granger Causality" method. As a result of the study, no causality relationship was found from FDI to CDS premiums and from CDS premiums to FDI at 5% significance level.