A New Framework for Output-Unemployment Relationship: Okun’s Law Revisited

This paper provides a new and useful framework for developing various models to investigate the output-unemployment relationship. By using this framework, a simple but reasonable theoretical background to Okun’s law is derived. This theoretical background, in turn, facilitates the decomposition of Okun’s law coefficient into several quantifiable and interpretable components that incorporate main insights from Arthur Okun’s original analysis. The empirical decomposition exercise indicates that Okun’s law has an inherent tendency to vary substantially over time, especially, in response to the structural changes in legal, institutional and other related characteristics of labor and goods markets.output-unemployment relationship; Okun’s law

Political instability, public investment and macroeconomic performance

This paper attempts to provide a framework to explain both the lower share of current spending in large fiscal adjustments and the potential expansionary effects of fiscal contractions. We distinguish between current spending and productivity enhancing public investments and analyze the potential determinants of the policy maker's choice for the composition of overall public spending. Using this framework, we also link the overall macroeconomic performance to the public spending decisions. Our results suggest that raising current spending at the expense of public investment is associated with less favourable performance in terms of not only inflation and output but also, interestingly, future ‘current'' spending.composition of public spending

Macroeconomic instability, capital accumulation and growth: The case of Turkey 1963-1999

This study investigates the empirical relationships between macroeconomic instability, capital accumulation and growth in Turkey over the period 1963-1999. We use recent time series econometric techniques, such as cointegration and impulse response analysis, to analyze empirical relationships between the variables of interest. The results of this paper suggest that the chronic and increasing macroeconomic instability of the Turkish economy has seriously affected her capital formation and hence her growth. Furthermore, chronic macroeconomic instability seems to become a serious impediment to the public investment, especially, its infrastructure component, and shattered or, even reversed the complementarity between public and private investment in the long-run. Therefore, Turkish experience has shown that macroeconomic instability not only deteriorates economic growth but it could also reverse the complementarity between public and private investment in the long-run.Public Investment, Private Investment, Complementarity, Macroeconomic Instability

Macroeconomic Instability, Capital Accumulation and Growth : The Case of Turkey 1963-1999

Public investment; Private investment; Complementarity; Macroeconomic Instability

The Banking Sector, Government Bonds and Financial Intermediation: The Case of Emerging Market Countries

This paper develops an analytical framework to explore how financial sector characteristics shape domestic debt dynamics in emerging market economies. Our analysis suggests that the more competitive the banking sector and the more liquid and deeper the deposit market, the better would be the conditions in the public securities market. Our results also reveal that the lower the financial depth, the greater the scale of private sector credits that are crowded-out by public borrowing. To the extent that credit availability is associated with improved productivity and better output performance, the lack of financial depth in emerging market countries implies that extensive domestic borrowing in these countries may have consequences far beyond the concern with fiscal sustainability. As such, our results higlight the importance of developing domestic debt markets for financial and macroeconomic stability.Financial sector; public debt; cost of borrowing.

A New Framework for Output-Unemployment Relationship: Okun’s Law Revisited

This paper provides a new and useful framework for developing various models to investigate the output-unemployment relationship. By using this framework, a simple but reasonable theoretical background to Okun’s law is derived. This theoretical background, in turn, facilitates the decomposition of Okun’s law coefficient into several quantifiable and interpretable components that incorporate main insights from Arthur Okun’s original analysis. The empirical decomposition exercise indicates that Okun’s law has an inherent tendency to vary substantially over time, especially, in response to the structural changes in legal, institutional and other related characteristics of labor and goods markets

Proceedings of the Conference on Globalization and Its Discontents

Recent studies on economic globalization have used various indicators, such as the ratio of trade-to-GDP and the ratio of FDI-to-GDP, to analyze the globalization performances of national economies. Although each indicator is useful in itself, our contention is that a single composite indicator (index) can provide more comprehensive information and would enable policy-makers and researchers to compare and rank the globalization performances of different countries, country groups and regions in a given year (or period) and over time. Accordingly, in this paper, we developed the economic globalization index to measure the extent of globalization of national economies. We have constructed the economic globalization index for the period 1975-2005. The overall results indicate that rich countries tend to be more globalized than poor countries. Furthermore, rich countries have improved their globalization –relative global integration level- from 1975 to 2005; however, many of poor countries’ relative levels of global integration have deteriorated during the same period. Our results seem to be in line with studies that characterize the recent situation in the world as “truncated globalization” or simply “triadization”.globalization, economic globalization index

A New Framework for Output-Unemployment Relationship: Okun’s Law Revisited

This paper provides a new and useful framework for developing various models to investigate the output-unemployment relationship. By using this framework, a simple but reasonable theoretical background to Okun’s law is derived. This theoretical background, in turn, facilitates the decomposition of Okun’s law coefficient into several quantifiable and interpretable components that incorporate main insights from Arthur Okun’s original analysis. The empirical decomposition exercise indicates that Okun’s law has an inherent tendency to vary substantially over time, especially, in response to the structural changes in legal, institutional and other related characteristics of labor and goods markets

Kronik İstikrarsızlık ve Potansiyel Büyüme Hızı: Türkiye Deneyimi, 1960-2006

Bu çalışmada, Türkiye'de makroekonomik istikrarsızlığın potansiyel büyüme hızı üzerindeki rolü 1960-2006 dönemi için araştırılmaktadır. Bu bağlamda, Türkiye ekonomisinin potansiyel büyüme hızı Hodrick-Prescott filtreleme yöntemi ve üretim fonksiyonu yaklaşımı çerçevesinde geliştirilen model ile tahmin edilmeye çalışılmıştır. Ayrıca, makroekonomik istikrarsızlık ve potansiyel büyüme arasındaki ilişki hem betimsel (tasviri) hem de ampirik tekniklerle incelenmiş olup, elde edilen bulgular, Türkiye ekonomisinde 1970'li yılların ortasından 2001 yılına kadar geçen süre zarfında yaşanan kronik istikrarsızlık süreçlerinin, büyüme performansı açısından önemli kayıplara yol açtığını göstermektedir. Diğer yandan, 2002-2006 döneminde gerçekleşen yüksek büyüme performansının elde edilmesine en temel katkıyı makroekonomik istikrarsızlıktaki kritik düşüş sağlamıştır. Ancak, yakın gelecekte, arzulanan yüksek büyüme performansını devam ettirebilmek için, istikrar ortamını korurken hem fiziki hem de beşeri sermaye oluşumunu süratle hızlandırma ihtiyacı kaçınılmazdır.AbstractThis study investigates the role of macroeconomic instability on potential growth rate of output in Turkey over the period 1960-2006. In doing so, it also attempts to estimate the potential growth rate of Turkish economy over the sample period by using Hodrick-Prescott filter and model based on production function approach. Descriptive and empirical results suggest that Turkish economy suffered from a significant output loss during the chronic instability episodes, between the mid-1970s and 2001. A significant fall in macroeconomic instability has provided the main contribution to the achievement of therecent high growth episode (2002-2006) of Turkish economy. However, in order to continuethe desired high growth performance in near future it is necessary to accelerate both humanand physical capital formation while preserving stability

Siyaset ve istikrarsızlığın kamu harcama dinamikleri ve makroekonomik performans üzerindeki rolü : teori ve Türkiye deneyimi

This Ph.D. thesis comprises of two parts. Part I develops a framework to provide insights into the understanding of several political macro-economy issues related to fiscal policy making. This framework links the overall macroeconomic performance to the public spending and borrowing decisions. The key feature of this framework is that it makes a distinction between productive (e.g. public investment) and non-productive public spending (e.g. popular spending). It is shown that a high level of political instability may lead to myopic and populist policies and may be associated with less favorable macroeconomic performance in terms of not only future output and inflation but also future popular spending. Part I also suggests an alternative channel for expansionary or Non-Keynesian fiscal contractions based on the productivity enhancing role of productive public spending. It is shown that if the incumbent government reduces popular (productive) spending rather than productive (popular) spending, then Non-Keynesian (Keynesian) effects are achieved. Furthermore, it is shown that the favorable effects of public investment depends positively on its quality in this framework. Moreover, the net effect of productive spending financed by borrowing on the next period's macroeconomic performance depends on the benefits of productive spending relative to the costs of borrowing. Even under a capital borrowing rule higher public investment may yield unfavorable effects and also it may not necessarily prevent the strategic use of public investment, even though it prevents strategic debt accumulation. Part II investigates the effects of macroeconomic instability on capital accumulation and economic growth in the Turkish economy over the 1963-1999 period. Descriptive and econometric (time series) analyses suggest that macroeconomic instability not only deters capital accumulation and economic growth but it may also reverse the complementarity between public and private investment in the long-run.Bu doktora tezi iki kısımdan oluşmaktadır. Birinci kısım maliye politikalarının oluşturulması ile ilgili bazı politik makro-iktisat konularının daha iyi anlaşılması için teorik bir çerçeve oluşturmaktadır. Bu kurguda makroekonomik performans ile kamu harcama ve borçlanma kararlan ilişkilendirilmektedir. Bu kurgunun temel özelliği verimli (örneğin kamu yatırımları) ve verimsiz kamu harcamaları (örneğin popüler harcamalar) arasında bir ayırımın yapılmasıdır. Yüksek düzeyde siyasi istikrarsızlığın kısa görüşlü ve popülist politikalara ve dolayısıyla daha kötü bir makroekonomik performansa yol açabileceği, ve bunun sadece gelecekteki üretim ve enflasyon açısından değil aynı zamanda gelecekteki popüler harcamalaraçısından da kötü olabileceği gösterilmiştir. Ayrıca, birinci kısımda, verimli kamu harcamalarının verimliliği artırıcı rolü dikkate alınarak, genişletici veya Keynesyen olmayan mali daralmalar için alternatif bir kanal önerilmektedir. Hükümetin popüler (verimli) harcamalar yerine verimli (popüler) harcamaları azaltması halinde Keynesyen (Keynesyen olmayan), yani daraltıcı (genişletici) bir etkinin gerçekleştiği gösterilmiştir. Buna ilaveten, bu çerçevede kamu yatınmlanmn kahpesinin de kamu yatırmalarının olumlu etkilerini pozitif yönde etkilediği gösterilmiştir. Bunların yam sıra, borçlanma ile finanse edilen verimli harcamaların gelecek dönemdeki makroekonomik performans üzerindeki net etkileri bu harcamaların olumlu etküerinin yam sıra borçlanmanın maliyetinede bağlıdır. Sermaye borçlanma kuralının uygulanması, başka bir deyişle yatırım için borçlanma durumunda dahi kamu yatırımlanndaki bir artışın makroekonomik performans üzerinde olumsuz etkileri olabilir ve bu kuralın uygulanması her ne kadar stratejik amaçlı borçlanmayı engellese de, kamu yatırırnlarrnın stratejik amaçlı kullanımım engellemeyebilir. İkinci kısım Türkiye ekonomisindeki makroekonomik istikrarsızlığın sermaye birikimi ve ekonomik büyüme üzerindeki etkilerini 1963-1999 yıllan için araştırmaktadır. Tasviri ve ekonometrik (zaman serisi) analizler makroekonomik istikrarsızlığın sermaye birikimini ve ekonomik büyümeyi kötü etkilemekle kalmayıp ayrıca uzun vadede kamu yatırımları ve özel yatırımlar arasındaki tamamlayıcılık ilişkisini tersine çevirmiş olabileceğini göstermiştir.Ph.D. - Doctoral Progra