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Growth Effects Of Currency Misalignment And Capital Flight In Turkey

Author

Listed:
  • Abdullahil Mamun

    (International Islamic University Chittagong)

  • Harun Bal

    (Cukurova University)

  • Shahanara Basher

    (University of Science and Technology Chittagong)

  • Md Mahi Uddin

    (International Islamic University Chittagong)

  • Nazamul Hoque

    (International Islamic University Chittagong)

Abstract

This study examines the growth effects of Real Exchange Rate (RER) misalignment and capital flight in Turkey during the period 1981-2019. The World Bank’s residual method suggests that capital flight is a widespread problem in Turkey and the Single Equation Approach adopted to delineate the series of RER misalignment identifies that Turkey’s RER is significantly misaligned throughout the sample period. Their growth effects are then examined using the AutoRegressive Distributed Lag (ARDL) bounds approach and we document that RER misalignment degrades per capita output growth while growth faltering capital flight is evident in the presence of policy variables along with currency misalignment.

Suggested Citation

  • Abdullahil Mamun & Harun Bal & Shahanara Basher & Md Mahi Uddin & Nazamul Hoque, 2023. "Growth Effects Of Currency Misalignment And Capital Flight In Turkey," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 26(2), pages 221-250, May.
    • Handle: RePEc:idn:journl:v:26:y:2023:i:2b:p:221-250
    DOI: https://doi.org/10.59091/1410-8046.2069
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    More about this item

    Keywords

    Real exchange rate; Currency misalignment; Undervaluation; Capital flight; Economic growth;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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