Interdependency of Business Cycle between Turkey and the Selected Central Asian Countries

The dynamic interdependency among seven countries or economies (Turkey, Kazakhstan, Azerbaijan, Russia, China, Iran, and EU) is examined through the use of a vector error correction model, directed acyclic graphs (DAGs) and monthly data of the industrial production index. Overall, the results show that the industrial production of Russia affects the EU and the industrial production of the EU affects Turkey in a contemporaneous time horizon, which implies that two Central Asian countries, such as Azerbaijan and Kazakhstan, have no linkage with either Russia or Turkey in terms of their industrial production for a contemporaneous time horizon. However, all industrial productions of the seven economies are tied together in the long run in one cointegration relationship.