Year: 2013
Type: article
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
Authors: Güzin BAYAR, Selman TOKPUNAR
Language: Turkish
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W828674