Author/Authors
BAYAR, Güzin Orta Doğu Teknik Üniversitesi - İktisadi ve İdari Bilimler Fakültesi - İktisat Bölümü, Turkey , TOKPUNAR, Selman Gazi Üniversitesi - İktisadi ve İdari Bilimler Fakültesi - Ekonometri Bölümü, Turkey
Title Of Article
Is Turkish Lira Real Exchange Rate in Equilibrium?
شماره ركورد
44397
Abstract
Real exchange rate is an important variable affecting many macroeconomic indicators. In this study, long run equilibrium value of Turkish Lira is estimated and how far away is TL real exchange rate from its equilibrium value is examined. Long run cointegration relationship is estimated using fully modified ordinary least squares. Dependent variable is real exchange rate of TL and independent variables are “relative unit labor costs of OECD countries and Turkey”, “foreing capital inflows to Turkey”, “GDP of Turkey”, “foreign trade volume/GDP ratio”. Regression results approve Balassa-Samuelson effect for Turkey, increase in GDP of Turkey affects TL real exchange rate in the appreciation direction. Rise in foreign trade volume appreciates TL. Increasing capital inflows, puts appreciation pressure on TL. An increase in relative unit labor costs of OECD countries in comparison to Turkey’s, by decreasing competitive power of OECD countries, causes depreciation in TL. Results of the analysis show that, TL real exchange rate is close to its equilibrium value in the last period. Article also aim to open a discussion about whether it is advisable to do policy intervention to the equilibrium value of real exchange rate.
From Page
405
NaturalLanguageKeyword
FMOLS , real exchage rate , equilibrium , balassa , samuelson effect
JournalTitle
Ege Academic Review (EAR)
To Page
426
JournalTitle
Ege Academic Review (EAR)
Link To Document