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Do Capital Flows Improve Macroeconomic Performance in Emerging Markets? : The Turkish Experience

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  • HAKAN BERUMENT
  • N. NERGIZ DINCER

Abstract

This study examines the effects of capital inflows on the macroeconomic performance in an emerging, small open economy--Turkey. Using monthly data from 1992:01 to 2001:06 and a recursive vector autoregression model, we find that positive innovations in capital inflows appreciate the domestic currency, and increase output and money supply, but decrease interest rates and prices in the short run. We also find that the exchange rate regime does not influence the effects of capital flows on macroeconomic performance. Implications of the findings for policymakers are analyzed.

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File URL: http://mesharpe.metapress.com/link.asp?target=contribution&id=FYW3A4GCE6B692KR
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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

Volume (Year): 40 (2004)
Issue (Month): 4 (July)
Pages: 20-32

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Handle: RePEc:mes:emfitr:v:40:y:2004:i:4:p:20-32

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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024

Related research

Keywords: capital flows; Turkey; vector autoregression;

References

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  1. C. Emre Alper, 2002. "Business Cycles, Excess Volatility, and Capital Flows: Evidence from Mexico and Turkey," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 38(4), pages 25-58, August.
  2. C. Emre Alper, Ismail Saglam, 2001. "The Transmission of a Sudden Capital Outflow: Evidence from Turkey," Eastern European Economics, M.E. Sharpe, Inc., vol. 39(2), pages 29-48, March.
  3. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1994. "The capital inflows problem: Concepts and issues," MPRA Paper 13902, University Library of Munich, Germany.
  4. Reinhart, Carmen & Khan, Mohsin, 1995. "Capital Flows in the APEC Region," MPRA Paper 8200, University Library of Munich, Germany.
  5. Cevdet Akcay & Unal Zenginobuz, 2001. "Vulnerability to Purely Contagious Balance of Payment Crises in Emerging Economies: An Application to the Cases of Russia, Turkey, and Brazil," Working Papers 2001/03, Bogazici University, Department of Economics.
  6. J Benson Durham, . "Econometrics of the Real Effects of Cross-Border Capital Flows in Emerging Markets," QEH Working Papers qehwps52, Queen Elizabeth House, University of Oxford.
  7. Bekaert, Geert, 1995. "Market Integration and Investment Barriers in Emerging Equity Markets," World Bank Economic Review, World Bank Group, vol. 9(1), pages 75-107, January.
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Citations

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Cited by:
  1. Nuri Yildirim & Huseyin Tastan, 2009. "Capital flows and economic growth across spectral frequencies: Evidence from Turkey," Working Papers 2009/2, Turkish Economic Association.
  2. Levent, Korap, 2007. "Structural VAR identification of the Turkish business cycles," MPRA Paper 21971, University Library of Munich, Germany.
  3. Josef T. Yap, 2008. "Managing Capital Flows : The Case of the Philippines," Development Economics Working Papers 22703, East Asian Bureau of Economic Research.
  4. Korap, Levent, 2010. "Identification of ‘pull’ & ‘push’ factors for the portfolio flows: SVAR evidence from the Turkish economy," MPRA Paper 24275, University Library of Munich, Germany.
  5. Levent, Korap & Özgür, Aslan, 2007. "Exogenous characteristics of short-term capital flows: can they be under control? evidence from Turkey," MPRA Paper 19504, University Library of Munich, Germany.

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