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Impact of Credit Expansion on the Current Account Deficit: The Case of Turkey

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  • Köroğlu, Emrah

Abstract

The aim of the study is to analyze in Turkey's economy, the effect of total loan volume expansion on the current account deficit between the years 1982-2016. Current account deficit and loan volume variables used in the analysis are analyzed annually. In this study, Augmented Dickey-Fuller unit root test was used for stationarity detection, Engle-Granger cointegration test for cointegration test, Error correction model for the tendency to returne to equilibrium in the short term and Granger causality test for determining the causality between variables. As a result, it was determined that credit volume expansion caused the current account deficit. There is no causality relation to credit expansion from the current account deficit.

Suggested Citation

  • Köroğlu, Emrah, 2018. "Impact of Credit Expansion on the Current Account Deficit: The Case of Turkey," Bulletin of Economic Theory and Analysis, BETA Journals, vol. 3(3), pages 175-193, September.
    • Handle: RePEc:ris:betajl:0027
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    More about this item

    Keywords

    Turkish Economy; Current Account Deficit; Credit Expansion; Granger Causality;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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