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A Bayesian Estimation of Real Business-Cycle Models for the Turkish Economy

Author

Listed:
  • Hüseyin Taştan

    (Yildiz Technical University, Department of Economics, Yıldız Beşiktaş Đstanbul, Turkey)

  • Bekir Aşık

    (Beykent University, Department of Economics, Maslak-Sarıyer Đstanbul, Turkey)

Abstract

We estimate a canonical small open economy real business-cycle model and its several extensions using a Bayesian approach to explore the effects of different structural shocks on macroeconomic fluctuations in Turkey. Alternative models include several theoretical exogenous shocks, such as those to temporary and permanent productivity, world interest rates, preferences, and domestic spending, as driving forces together with financial frictions. Results indicate that output is mostly driven by trend growth shocks, while temporary shocks are relatively less important. Although empirical results generally favor the stochastic trend model, in which there are only transitory and permanent productivity shocks as causative elements, an extended model with random world interest rates and various financial frictions can be a viable alternative to explain economic fluctuations.

Suggested Citation

  • Hüseyin Taştan & Bekir Aşık, 2014. "A Bayesian Estimation of Real Business-Cycle Models for the Turkish Economy," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 3(2), pages 27-50, May.
    • Handle: RePEc:tek:journl:v:3:y:2014:i:2:p:27-50
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    More about this item

    Keywords

    Real business-cycle models; financial frictions; Turkey; small open economy; emerging economies;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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