Download or read book International capital flows and their impact on the Turkish economy written by Ahmet Çimenoğlu and published by . This book was released on 2002 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The 1990s witnessed a significant surge in international capital flows. However, unlike in the previous episodes of high capital mobility , not only developed countries but also developing countries were subject to international capital flows. Especially in the first half of 1990s, there has been a significant increase in capital flows to developing countries. However in 1997, the wave of crises that started in Mexico in 1994 spread to the South East Asian countries that were pinpointed as success stories, to Russia in 1998, to Brazil in 1999, to Turkey in 2000, and to Turkey and Argentina in 2001. All of these countries have been severely hit by this recent wave of crises. The increase in the frequency of crises in developing countries raised concerns about their relationship to capital flows. The purpose of this study is to investigate the effects of international capital flows on developing country economies, paying specific attention to Turkey .In doing so, first a brief history of the international capital flows has been presented, then discussions about the determinants of capital flows have been reviewed. In fact, international capital flows were quite mobile at the end of the 19th century.However, these flows almost disappeared after the World War 1. Capital flows started to increase among developed countries in the 1970s. However, the surge in capital flows in developing countries only became significant in the 1990s. The wave of liberalisation of capital accounts should be seen as complementary to liberalisation and deregulation of foreign trade and financial sectors. Following the developed countries that put in effect liberalisation process in the 1970s, developing countries started to implement similar policies, mostly at the suggestion of international financial institutions and developed country goverments. Although there are some minor differences from country to country , the general outline of the liberalisation episodes of. developing countries were quite similar. This outline was basically prepared by elements of the so-called Washington Consensus, mainly in the last two decades. These elements are the International Monetary Fund (IMF), World Bank, World Trade Organisation (WTO), American economic bureaucracy, and private think-tank institutions mostly based in Washington. The proposed process of liberalisation and integrati9n with the world financial markets was submitted to the developing countries that expressed their willingness to accept liberalisation and integration. The crises that many countries have been subject to in the 1990s were mainly classified as currency and banking sector crises. For this reason, understanding what exactly currency crises are, which mechanisms produce them, whether it is possible to foresee them, and what their effects are on macroeconomic variables need to be examined carefully. Moreover, the observation that the currency crises usually come along with banking crises raised concerns about the relationpship between the two, and a substantial literature on this issue emerged. Another important discussion is about the choice of the exchange rate regime and whether this choice is influential in instigating a crisis. The literature on these issues is presented in the third chapter of this study .These discussions are quite relevant for Turkey which is on the brink of implementing a new exchange rate and monetary policy . The last chapter of this study is devoted to the analysis of Turkey's experience with international capital flows. Until the 1990s, Turkey was almost completely isolated from international capital flows. Liberalisation of capital account transactions in 1989 can be regarded as the continuation of the liberalisation process that started in 1980 with the liberalisation of foreign trade, followed by gradual deregulation of financial markets. Through the effective implementation of capital account liberalisation in 1990, there has been an increase in international capital movements in Turkey .When capital flows in the 1990s are analysed, there are two features that distinguish Turkey from her peers. The first is that the net capital flows to Turkey , when measured as the share of capital flows in Gross National Product (GNP), were lower than those flowing to comparable developing countries. The second is that the volatility of the flows was higher in Turkey than in other developing countries, meaning that Turkey could not enjoy sustained net capital inflows in the 1990s. Another issue that has been investigated in this study is the degree of success Turkey had in integrating into the global financial markets. For this investigation, two methods that have been widely employed have been adopted to Turkey .These methods are testing whether the uncovered interest parity (UIP) holds for Turkey , and whether savings and investments are correlated in Turkey .In the first test, the rationale is to test whether the yields on similar assets in domestic and foreign markets do approach each other, as the theory predicts. The results of this test for Turkey indicate that the domestic and foreign interest rates on similar assets do not converge. The second test that has been conducted for Turkey is to check whether savings and investments are correlated. The rationale behind this test is that capital has the ability of searching for the highest yield and investing there, given that capital can flow freely across borders. Hence, savings generated in a specific country can be directed to somewhere else in the world, if investment there offers a higher yield than the country of origin. In other words, investment at home does not necessarily have to be financed by savings at home. The theory predicts that, if a country is successfully integrated into the international financial system, then there should be no correlation between her savings and investments. The tests that have been run for Turkey to check for this relationship yielded somewhat confusing results. Moreover, the lack of data to resolve the endogeneity problems inherent in this test forces one to be cautious in interpreting the results obtained. The results obtained from annual and quarterly data differ as well. While with the annual data it is not possible to argue that savings and investments are not correlated at any time in Turkey , with quarterly data, it is possible to argue that a correlation,between the two disappears after 1990. Roughly summarising .the results of the tests, it can be argued that investments and savings in Turkey exhibited a much stronger correlation before 1990, but this correlation weakened afterwards, just as the theory would predict. To sum up, Turkey made the necessary legal and regulatory changes in order to liberalise her capital account in 1990. This apparently increased the volume of international capital transactions in the 1990s. However, it is difficult to argue that Turkey successfully managed to completely integrate her financial system with global financial markets. The main reasons behind this are macroeconomic instability , underdeveloped financial markets, and working 'in a regulatory and supervisory environment that was too weak to help enhance the efficiency of the system. The final part of this study is devoted to the analysis of the effects of international capital flows on the Turkish economy .In order to analyse these effects, a simple framework has been used in which the channels through which capital inflows are transmitted to the domestic economy are determined. Afterwards, the existence of these channels has been tested using econometric techniques. The findings suggest that a surge in capital inflows firstly increases private sector consumption expenditures and then private sector investments. However, the increase in investment is directed more heavily to non-tradable sectors. This finding has far reaching implications on the process that leads to crises in Turkey .Increased investments in non-tradable sectors do not contribute to the foreign exchange earning capacity of the country .In times of crises, this turns into a major problem as the country faces significant capital outflows and eventually goes into a crisis accompanied by large current account deficits. Given the above process, in this study it is argued that the existence of international capital flows exacerbates the crisis thatTurkey faces. However, it does not mean that it is the ''capital inflows'' themselves that create the crisis. In fact, it is the handling of the foreign capital flows that triggers the crisis. The Turkish financial system was not, and in fact is still not, developed enough to damp down the excessive volatility in international capital flows. Moreover, most of the capital inflows that were relied upon in financing current account deficits were of short-term nature. In other words, Turkey relied mainly on short-term capital inflows in financing her current account deficits, with a domestic financial system that was not large and sophisticated enough to handle the potential difficulties associated with sudden capital inflow reversals. Even more importantly , successive governments over the last decade ignored the fact that these capital inflows might not be sustainable, and went on expanding the public sector deficits all through 1990s. Hence, given the above vulnerabilities, crises were inevitable.

Download or read book Fiscal Imbalances Capital Inflows and the Real Exchange Rate written by E. Murat Ucer and published by International Monetary Fund. This book was released on 1997-01-01 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the links between fiscal policy, capital inflows, and the real exchange rate in Turkey since the late 1980s. After an overview of recent macroeconomic developments in Turkey, a vector autoregression model is estimated linking government spending, interest rate differentials, capital inflows, and the temporary component of the real exchange rate. Positive shocks to government spending and capital inflows lead to an appreciation of the temporary component of the real exchange rate, whereas positive shocks to the uncovered interest rate differential lead to a capital inflow and an appreciation of the temporary component of the real exchange rate. The findings highlight the role of fiscal adjustment in restoring macroeconomic stability.

Download or read book Turkish Economy At The Crossroads Facing The Challenges Ahead written by Asaf Savas Akat and published by World Scientific. This book was released on 2020-10-05 with total page 370 pages. Available in PDF, EPUB and Kindle. Book excerpt: Turkish Economy at the Crossroads: Facing the Challenges Ahead is an exciting new volume of articles from prominent experts, edited by two distinguished economists. Despite its international stature and its diversified open-market economy, the global literature on Turkey is dispersed and sparse. The book aims to remedy this shortcoming by providing readers interested in Turkey with a balanced and up-to-date overview of the economy.Topics discussed include trends in long-term political economy, post-2001 macroeconomic policies, tradable and non-tradable sectors and their impact on income distribution, capital flows and financial imbalances, success and problems of structural transformation at the micro level, characteristics of the labor markets with special emphasis on female employment, Turkey's long lasting but difficult relations with the European Union and possible scenarios for the near future. This unified approach permits to highlight and tackle effectively the challenges and risks Turkey faces in the final and critical stage of transition to a modern developed society.

Download or read book Capital Flows Macroeconomic Management and the Financial System written by Oya Celasun and published by . This book was released on 2016 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Between 1989-97, large private capital flows to Turkey contributed to economic growth. Yet chronic and high fiscal deficits - coupled with an inconsistent financial sector regulatory framework - left the banking system and the economy vulnerable to capital flow reversals and external shocks.Recent developments in a number of emerging economies have heightened interest in the relationship between macroeconomic management and financial regulation, in an environment of open capital accounts and large-scale movements of private capital.Celasun, Denizer, and He analyze the Turkish experience with capital flows in a macroeconomy characterized by chronically high inflation and fiscal deficits. They study the relationship between capital flows, macroeconomic management, and vulnerability in the financial system.Their analysis highlights the importance of fiscal policy in an era of large capital flows. Fiscal imbalances contributed both to real exchange rate appreciation and high real interest rates in Turkey.The high interest rates the government must pay on domestic debt have become one of the key issues of Turkey's macroeconomic management. Only by reducing its interest expenses can fiscal deficits be reduced and greater stability be achieved.The Turkish banking system, in becoming increasingly integrated with international financial markets, has become vulnerable to shifts in market confidence. Banks borrowed abroad in response to macroeconomic imbalances to benefit from high interest rates on domestic loans and government paper. In the process, the banks have exposed themselves to interest rate risk, to foreign-exchange risk, and to large credit risks.To reduce the Turkish economy's vulnerability to external shocks, financial regulation must be strengthened simultaneously with the achievement of macroeconomic stability.This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region - is part of a larger effort in the region to examine the relationship between capital flows and economic management. The authors may be contacted at [email protected], [email protected], or [email protected].

Download or read book The Turkish Economy in Crisis written by Ziya Onis and published by Routledge. This book was released on 2004-08-02 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a set of critical perspectives on the economic crises of 2000 and 2001 focusing on both the origins and consequences of the crises. Attention is drawn to the role of domestic actors as well as key external actors such as the International Monetary Fund in precipitating the twin crises.

Download or read book Turkey and the Global Economy written by Ziya Onis and published by Routledge. This book was released on 2009-10-01 with total page 503 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the financial crisis of 2000 and 2001 the Turkish economy has undergone considerable change and some improvement. This book gives a detailed examination of the neo-liberal restructuring that has taken place and the challenges the economy still faces, providing a comparative perspective on recent reforms and the position of Turkey in the global economy. This book examines all major aspects of the post-crisis economic performance of the Turkish economy. Major sectors of the economy such as agriculture and manufacturing along with key issues such as privatization, export growth, developments in the labour market, poverty and social exclusion are analysed in detail. The authors consider Turkish performance from a comparative perspective, drawing attention to its similarities with the experience of other emerging markets. Providing an insight into the major difficulties of post-crisis adjustment, sustainability of the gains achieved so far and the challenges that lie ahead, this book will be of interest to academics and scholars in the fields of International Political Economy and Globalization Studies, Middle East Studies and Development Studies, as well as having significance for practitioners in emerging markets.

Download or read book Capital Flows Macroeconomic Management and the Financial System written by Oya Celasun and published by World Bank Publications. This book was released on 1999 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: July 1999 Between 1989-97, large private capital flows to Turkey contributed to economic growth. Yet chronic and high fiscal deficits - coupled with an inconsistent financial sector regulatory framework - left the banking system and the economy vulnerable to capital flow reversals and external shocks. Recent developments in a number of emerging economies have heightened interest in the relationship between macroeconomic management and financial regulation, in an environment of open capital accounts and large-scale movements of private capital. Celasun, Denizer, and He analyze the Turkish experience with capital flows in a macroeconomy characterized by chronically high inflation and fiscal deficits. They study the relationship between capital flows, macroeconomic management, and vulnerability in the financial system. Their analysis highlights the importance of fiscal policy in an era of large capital flows. Fiscal imbalances contributed both to real exchange rate appreciation and high real interest rates in Turkey. The high interest rates the government must pay on domestic debt have become one of the key issues of Turkey's macroeconomic management. Only by reducing its interest expenses can fiscal deficits be reduced and greater stability be achieved. The Turkish banking system, in becoming increasingly integrated with international financial markets, has become vulnerable to shifts in market confidence. Banks borrowed abroad in response to macroeconomic imbalances to benefit from high interest rates on domestic loans and government paper. In the process, the banks have exposed themselves to interest rate risk, to foreign-exchange risk, and to large credit risks. To reduce the Turkish economy's vulnerability to external shocks, financial regulation must be strengthened simultaneously with the achievement of macroeconomic stability. This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region - is part of a larger effort in the region to examine the relationship between capital flows and economic management. The authors may be contacted at [email protected], [email protected], or [email protected].

Download or read book Turkish Economy written by Ahmet Faruk Aysan and published by Springer. This book was released on 2018-03-30 with total page 425 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book scrutinizes the last 15 years of exceptional growth in the Turkish economy, and presents a model for sustainable ongoing growth that has particular implications for other key emerging economies. The growth of the Turkish economy in the 2000’s was based on two integrated fundamental factors: fixing deteriorating dynamics and implementing further reforms to stimulate economic activity. This basic formula led to pleasing rates of economic growth, fuelled particularly by domestic private investments along with revived consumption and exports. Driven by political stability established by single party governments in the post-2002 period, an improved economic outlook helped Turkey enjoy record levels of foreign investment, adding momentum to its growth story. The Turkish experience in the post-crisis period implies that in order to achieve a fast and - more importantly - sustainable onward growth, the economy needs a new generation of structural reforms that simultaneously heal fragility and vitalize economic activity. The papers in this book offer professional assessments and assistance - especially for policymakers, and present a new direction upon which the Turkish economy - and emerging markets - can progress successfully for a further 15 years.

Download or read book Crises Portfolio Flows and Foreign Direct Investment written by Merih Uctum and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze how financial and economic crises affect the relation between the components of capital flows and their determinants in an emerging economy. Our results suggest that the composition of capital flows matters, crises can explain the volatility of portfolio flows and foreign direct investment, and modeling them as endogenous breakpoints improves the results considerably. By using data from the Turkish economy, we estimate these breakpoints together with the parameters of the model and find that they correspond to international and domestic crises that hit the country. Although both components are affected by similar crises, direct investment reacts strongly to the domestic crisis, while portfolios flows are more sensitive to global financial conditions. Breaks also have an effect on the significance and sign of determinants of each type of international investment. Evidence indicates changes in all coefficients in both investment types and suggests that analyses assuming parameter constancy lead to misleading results if they ignore the influence of endogenous breaks.

Download or read book Taming Capital Flows written by J. Stiglitz and published by Springer. This book was released on 2015-05-05 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume contains country experiences explained by policy makers and studies by leading experts on causes and consequences of capital flows as well as policies to control these flows. It addresses portfolio flow issues central to open economies, especially emerging markets.

Download or read book The Turkish Economy written by Sumru Altug and published by Psychology Press. This book was released on 2006 with total page 340 pages. Available in PDF, EPUB and Kindle. Book excerpt: Including contributions from noted international scholars, this collection of papers provides a strong theoretical and empirical underpinning for the discussion of major public policy issues facing Turkey today. Matters addressed include:- determinants of growth and productivity- education and human capital accumulation- income inequality- corporate control and government- performance of the government sector- impact of major public policy issues on the future growth prospects of the Turkish economy.This volume relates the impact of major public policy issues on the future growth prospects of the Turkish economy. At a time when Turkey is currently attempting to gain membership to the European Union, this pertinent reference questions whether the country's economy is in fact ready for EU accession and membership.

Download or read book Turkish Economic Policies and External Dependency written by Murat Çimen and published by Cambridge Scholars Publishing. This book was released on 2014-09-26 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the 1950s, the Turkish economy has periodically been facing crises. Decisions taken after crisis do not only have economic effects, but also social, political and diplomatic consequences. For the country, total independence was considered the main principle; economic independence was one of the substantial criteria of that principle, and economic policies were based on it. In this book, the economic independency level at which governments can take independent decisions is defined in terms of macroeconomic variables, on which the proposed model is based and developed. The book aims to analyse the economic policies of Turkey, from an economic dependency perspective; identify the macroeconomic variables affecting economic dependency; and develop an alternative economic policy, taking all of these points into consideration. Therefore, in order to structure the proposed model and to define policies, it is crucial to discuss economic policies, particularly in the post-1980 world; their consequences and impacts on Turkey; crises and the main variables under which they occurred; and to compare the economic policies of the Republic period and their consequences as well. The book intends to develop an independent economic structure so that Turkey can act in her own interests.

Download or read book Turkey written by International Monetary Fund. European Dept. and published by International Monetary Fund. This book was released on 2012-12-21 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Selected Issues paper on Turkey discusses the new monetary framework adopted by the Central Bank of Republic of Turkey (CBRT). Instead of relying on one interest rate as inflation-targeting, the CBRT resorted to raising it as inflation pressures intensify and lowering it as they abate. The first version of the framework does not seem to have achieved significant reduction in external and internal imbalances, but the second version of the framework has witnessed an unwinding of imbalances.

Download or read book Do Capital Flows Improve Macroeconomic Performance in Emerging Markets written by Hakan Berument and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effects of capital inflows on the macroeconomic performance in an emerging, small open economy -- Turkey. Using monthly data from 1992:01 to 2001:06 and a recursive vector autoregression model, we find that positive innovations in capital inflows appreciate the domestic currency, and increase output and money supply, but decrease interest rates and prices in the short run. We also find that the exchange rate regime does not influence the effects of capital flows on macroeconomic performance. Implications of the findings for policymakers are analyzed.

Download or read book Volatility Spillovers from the International Capital Inflows to Economic Growth in Turkey written by Arif Soylemez and published by . This book was released on 2013 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper empirically investigates the volatility interactions between the international capital inflows to Turkey and Turkish economic growth using the post-financial-liberalization era data. With an Extended Constant Conditional Correlation GARCH model, it is shown that there are volatility spillovers from the capital inflows to growth in Turkey. Some earlier studies in literature have already established a positive relationship between the capital inflows and economic growth in Turkey. According to their results, as the mean value of capital inflows to Turkey increases, so does the conditional mean value of Turkish economic growth. This study is important for it shows that as the volatility of capital inflows to Turkey increases, so does the volatility of Turkish economic growth.

Download or read book Policy Responses to Capital Flows in Emerging Markets written by Mahmood Pradhan and published by International Monetary Fund. This book was released on 2011-04-20 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.

Download or read book OECD Economic Surveys Turkey 2010 written by OECD and published by OECD Publishing. This book was released on 2010-09-20 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt: This 2010 edition of OECD's periodical review of Turkey's economy examines sustaining the post-crisis recovery and mitigating future macroeconomic volatility, fostering sound integration with the global capital market, and regulatory reforms to ...