Article

Are devaluations contractionary? The case of Turkey

Applied Economics (Impact Factor: 0.46). 04/2010; 42(9):1077-1083. DOI: 10.1080/00036840701721208
Source: RePEc

ABSTRACT This article studies the output effects of currency devaluation in Turkey using annual data from 1970 to 2004. An empirical model that incorporates monetary, fiscal and other external variables in addition to exchange rates is developed. Before estimating the model, time-series properties of the data are diagnosed. Two forms of the model, one with real exchange rate and the other with nominal exchange rate and relative price level (foreign-to-domestic price ratio) are estimated. The results suggest that devaluation is contractionary in the short run, expansionary in the medium run and neutral in the long run, and the effects emanate from nominal devaluation and not from the changes in relative price level.

0 Followers
 · 
102 Views
  • Source
    • "They concluded that currency depreciation has negative effect in 6 countries, while has positive effect in 3 countries and no effect in remaining 14 countries. Sencicek and Upadhyaya (2008) examine the contractionary devaluation hypothesis in Turkey using annual data forum 1970 to 2004. They concluded while devaluation is contractionary in the short run, it is expansionary in the medium run and neutral in the long run. "
    [Show abstract] [Hide abstract]
    ABSTRACT: In this study, we analyze what kind of effect public investment has on private sector investment by employing unit root and cointegration tests, which allow a structural break between 1970-2009. The results, we obtained, show that the public investment has crowding in effect on private sector investment, that is an increase in public investments create also an increase in the private sector investments in the analysis period.
    Journal of Economic Cooperation and Development 01/2011;
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: As far as the impact of devaluation on domestic production is concerned, African countries have not received much attention in the literature. One study that used panel data arrived at a general conclusion that devaluations are contractionary in Africa. In this paper, we consider the experience of 22 African countries with devaluation and use time series data to show that devaluations are indeed expansionary in eight countries and contractionary in five countries. In the remaining countries, they have no effect.
    Global Economic Review 03/2013; 42(1). DOI:10.1080/1226508X.2013.769798 · 0.20 Impact Factor