The Nature Of Impulse Mechanısm: An Empırıcal Study For Turkey

The fundamental purpose of this paper is to identify the nature of impulse mechanism, from which random shocks to general price and income levels are generated. In recent business cycle literature, it is generally accepted that business cycles are triggered by random productivity and technology shocks. However, this approach can not explain the current degree of volatility of business cycle fluctuations. Especially, New Keynesian economists emphasized the influence of demand shocks under the assumption of nominal and real rigidities and some other market imperfections. Therefore, it is convenient to identify whether the shocks to the general prices and national income are on demand or supply side. It is shown in the paper that between the first quarter of 1987 and the fourth quarter of 2003 in Turkey, shocks to national income are mostly composed of shocks to demand factors. On the other hand, the shocks to cost factors influence the shocks to general price level more frequently than shocks to demand factors.fluctuations; business cycle; macro economics; supply demand shocks

A Simple Model Of Currency Crises And Budget Deficits: The Case Of Turkey

The aim of this paper is to explore the determinants of currency crises and to illustrate the dynamic behaviour of the fundamental macroeconomic variables in a small open economy under a peg regime. The mainstream models in currency crises literature are not sufficiently available to explain the recent Turkish currency crisis observed in 2000. Turkey was successful to fix domestic credit at the same time with a crawling peg regime in order to achieve price stability. Furthermore, the political preferences were also in favour of continuing the program. Though these facts, the peg collapsed by a speculative attack. Depending on these issues, in our model, which uses a Keynesian framework augmented with a speculative foreign exchange market, it has been focused on the fundamental macroeconomic relationship between budget and trade deficits. Our theoretical model and the simulation results indicate that whether the deficit is financed by monetisation or domestic borrowing, persisting budget deficits cause the peg system to collapse. Overborrowing problems and deterioating balance sheets also play an important role on the unsustainability of the peg regime

The Nature Of Impulse Mechanısm: An Empırıcal Study For Turkey

The fundamental purpose of this paper is to identify the nature of impulse mechanism, from which random shocks to general price and income levels are generated. In recent business cycle literature, it is generally accepted that business cycles are triggered by random productivity and technology shocks. However, this approach can not explain the current degree of volatility of business cycle fluctuations. Especially, New Keynesian economists emphasized the influence of demand shocks under the assumption of nominal and real rigidities and some other market imperfections. Therefore, it is convenient to identify whether the shocks to the general prices and national income are on demand or supply side. It is shown in the paper that between the first quarter of 1987 and the fourth quarter of 2003 in Turkey, shocks to national income are mostly composed of shocks to demand factors. On the other hand, the shocks to cost factors influence the shocks to general price level more frequently than shocks to demand factors

The Nature Of Impulse Mechanısm: An Empırıcal Study For Turkey

The fundamental purpose of this paper is to identify the nature of impulse mechanism, from which random shocks to general price and income levels are generated. In recent business cycle literature, it is generally accepted that business cycles are triggered by random productivity and technology shocks. However, this approach can not explain the current degree of volatility of business cycle fluctuations. Especially, New Keynesian economists emphasized the influence of demand shocks under the assumption of nominal and real rigidities and some other market imperfections. Therefore, it is convenient to identify whether the shocks to the general prices and national income are on demand or supply side. It is shown in the paper that between the first quarter of 1987 and the fourth quarter of 2003 in Turkey, shocks to national income are mostly composed of shocks to demand factors. On the other hand, the shocks to cost factors influence the shocks to general price level more frequently than shocks to demand factors