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Debt Sustainability and the Exchange Rate: The Case of Turkey

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Author Info
Nur Keyder () (Department of Economics, METU)
Abstract

The paper attempts to estimate the primary surplus requirement for debt sustainability in Turkey, taking into consideration not only the operational deficit and seigniorage factors but also the exchange rate factor. In estimations, a modified version of the approach suggested by the World Bank (2000:16-18; 121-124) is used (see Appendix A for the derivation of the original formula, which is slightly different from the one in the document mentioned). The analysis is carried out in two steps. First the real interest rate is estimated and then the results are plugged into the primary surplus equation. The exchange rate factor is taken up during the estimation of the real interest rate in TL, on FX-related debt. The debt sustainability issue is evaluated by comparing the estimated primary surplus-to-GNP ratios required for debt sustainability, with the targeted primary surplus ratio, taking into consideration the real interest rate and composition of the existing debt stock.

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File URL: http://www.erc.metu.edu.tr/menu/series03/0306.pdf
File Format: application/pdf
File Function: First version, 2003
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Publisher Info
Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number 0306.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 30 pages
Date of creation: Jun 2003
Date of revision: Jun 2003
Handle: RePEc:met:wpaper:0306

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Web page: http://www.erc.metu.edu.tr
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Related research
Keywords: Turkey debt sustainability

Find related papers by JEL classification:
H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Uctum, Merih & Wickens, Michael, 2000. " Debt and Deficit Ceilings, and Sustainability of Fiscal Policies: An Intertemporal Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(2), pages 197-222, May. [Downloadable!] (restricted)
    Other versions:
  2. Sebastian Edwards, 2002. "Debt Relief and Fiscal Sustainability," NBER Working Papers 8939, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Morris Goldstein, 2003. "Debt Sustainability, Brazil, and the IMF," Peterson Institute Working Paper Series WP03-1, Peterson Institute for International Economics. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Josef Pöschl & Hermine Vidovic & Julia Wörz & Vasily Astrov, 2005. "Turkey:Macroeconomic Vulnerability,Competitiveness and the Labour Market," Working Papers 2005/5, Turkish Economic Association. [Downloadable!]
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