EFFECTS OF THE REAL EXCHANGE RATE ON OUTPUT AND INFLATION: EVIDENCE FROM TURKEY
Влияние реального обменного курса на выпуск и инфляцию: данные по Турции
2003-12-01
SCID: 54.1/3nn9ymvx
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Turkeyeconomic performanceinflationoutputreal exchange rate depreciation
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Abstract (AI)
This paper assesses the effects of real depreciation on the economic performance of Turkey by considering quarterly data from 1987:I to 2001:III. The empirical evidence suggests that, contrary to classical wisdom, the real depreciations are contractionary, even when external factors like world interest rates, international trade, and capital flows are controlled. Moreover, the results obtained from the analyses indicate that real exchange rate depreciations are inflationary.
Key Findings
1
Real exchange-rate depreciations are found to be inflationary in Turkey.
2
The contractionary output effect of real depreciation persists after controlling for world interest rates, international trade, and capital flows.
3
The findings contradict the classical expectation that real depreciation improves economic performance.
4
Using quarterly Turkish data from 1987:I to 2001:III, the study finds that real exchange-rate depreciations are contractionary.
Research Object
Turkey's economy under real exchange rate depreciation
Research Subject
The effects of real exchange rate depreciation on economic output and inflation
Publication Details
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2003-12-01
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