The Comparison of the Recent Crises in Turkey in terms of Output Gap
AbstractThe importance of output gap and its timely measure come from the fact that it can serve as a guide to macroeconomic policy design. The knowledge of the position of an economy in a cycle is invaluable information and it has an important role in formulation of monetary, fiscal, and income policies. In this paper, we measure potential GDP and output gap for the Turkish Economy for the period between 1998Q1 and 2011Q4, using production function approach. We analyze the crises and the boom periods in terms of output gap. We find that according to the length of downturn and recovery periods, the worst crisis is the 2001. However, when we compare the crises according to the magnitude, the biggest collapse occurs during 2008 crisis. After recovering from 2008 crisis, once again the actual real GDP remains higher than the potential GDP for 5 successive quarters. Moreover, in this period actual real GDP is back on its old trend suggesting that the recovery period is over for Turkey and the negative effects of 2008 global crisis are not permanent.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 40806.
Date of creation: Jun 2012
Date of revision:
Crises; Output gap; Potential GDP; Production function approach; Turkey;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-03 (All new papers)
- NEP-ARA-2012-09-03 (MENA - Middle East & North Africa)
- NEP-MAC-2012-09-03 (Macroeconomics)
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