• Turgut TURSOY Department of Banking and Finance Near East University, Nicosia, North Cyprus


This study purpose is to examine the regime shift of public sector and private sector investments on economic growth in North Cyprus using with the Markov Switching Regression technique for the period from the first quarter of the year 1982 to the last quarter of the year of 2015. Both sector investments having effects on the economic growth at the concerned period and method provide the necessary evidence for the regime shifts. Two-regime (growth path/recession path) model has been estimated to analyse the Markov-switching model, Markov transition probabilities and constant expected durations.


[1] Arrow, K. J., and Lind, R. C. 1978. Uncertainty and the evaluation of public investment decisions. In Uncertainty in Economics (pp. 403-421).
[2] Bryson, J. M., and Roering, W. D. 1987. Applying private-sector strategic planning in the public sector. Journal of the American Planning Association, 53(1): 9-22.
[3] Fama, E. F., and French, K. R. 1988. Dividend yields and expected stock returns. Journal of financial economics, 22(1): 3-25.
[4] Fong, W. M., and See, K. H. 2002. A Markov switching model of the conditional volatility of crude oil futures prices. Energy Economics, 24(1): 71-95.
[5] Frühwirth‐Schnatter, S. 2004. Estimating marginal likelihoods for mixture and Markov switching models using bridge sampling techniques. The Econometrics Journal, 7(1): 143-167.
[6] Goldfeld, S. M. and Quandt, R. E. 1973. A Markov Model for Switching Regressions, Journal of Econometrics, 3–16.
[7] Gunsel, N. R., Tursoy, T., and Rjoub, H. 2010. An empirical analysis of currency crises, fundamentals and speculative pressure. African Journal of Business Management, 4(6): 972 - 978.
[8] Hamilton, James D. 1996. Specification Testing in Markov-switching Time-series Models, Journal of Econometrics, 70: 127–157.
[9] Holtz-Eakin, D. 1992. Public-sector capital and the productivity puzzle (No. w4122). National bureau of economic research.
[10] Kim, C. J., Piger, J., and Startz, R. 2008. Estimation of Markov regime-switching regression models with endogenous switching. Journal of Econometrics, 143(2): 263-273.
[11] Maddala, G. S. 1986. Disequilibrium, Self-Selection, and Switching Models, Handbook of Econometrics, Chapter 28 in Z. Griliches& M. D. Intriligator (eds.), Handbook of Econometrics, Volume 3, Amsterdam: North- Holland.
[12] Perron, P., and Vogelsang, T. J. 1992. Nonstationarity and level shifts with an application to purchasing power parity. Journal of Business & Economic Statistics, 10(3): 301-320.
[13] Shahbaz, M., Loganathan, N., Sbia, R., and Afza, T. 2015. The effect of urbanization, affluence and trade openness on energy consumption: A time series analysis in Malaysia. Renewable and Sustainable Energy Reviews, 47: 683-693.
[14] Sims, C. A., Waggoner, D. F., and Zha, T. 2008. Methods for inference in large multiple-equation Markov-switching models. Journal of Econometrics, 146(2): 255-274.
[15] Türsoy, T. 2013. Forecasting Economic Growth Rate: the Case of North Cyprus, NEU Journal of Social Sciences, 6(1): 193-207.
[16] Tursoy, T., and Faisal, F. 2017. Validity of FH hypothesis in small isolated island economy: an application of the combined cointegration approach. Asia-Pacific Journal of Accounting & Economics, 1-11.
How to Cite
TURSOY, Turgut. THE ROLES OF THE PUBLIC SECTOR AND THE PRIVATE SECTOR IN THE ECONOMY OF NORTH CYPRUS: EMPIRICAL EVIDENCE FROM MARKOV SWITCHING. Theoretical and Practical Research in the Economic Fields, [S.l.], v. 9, n. 2, p. 139-143, mar. 2019. ISSN 2068-7710. Available at: <>. Date accessed: 21 mar. 2019. doi: