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EFFECTS OF THE REAL EXCHANGE RATE ON OUTPUT AND INFLATION: EVIDENCE FROM TURKEY
Author(s) -
BERUMENT Hakan,
PASAOGULLARI Mehmet
Publication year - 2003
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.2003.tb01009.x
Subject(s) - economics , depreciation (economics) , exchange rate , inflation (cosmology) , monetary economics , real interest rate , fisher hypothesis , capital flows , interest rate , macroeconomics , capital (architecture) , econometrics , capital formation , microeconomics , financial capital , geography , profit (economics) , physics , archaeology , theoretical physics
This paper assesses the effects of real depreciation on the economic performance of Turkey by considering quarterly data from 1987:I to 2001:III. The empirical evidence suggests that, contrary to classical wisdom, the real depreciations are contractionary, even when external factors like world interest rates, international trade, and capital flows are controlled. Moreover, the results obtained from the analyses indicate that real exchange rate depreciations are inflationary.