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Cyclically Adjusted Current Account Balance

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  • A. Hakan Kara
  • Cagri Sarikaya

Abstract

Economic policies focusing on macro-financial risks in Turkey attribute special emphasis on current account developments. In this context, quantifying the role of cyclical factors in driving current account deficit is crucial for the design of an appropriate policy response against current account volatility. Using a simple methodology, this note decomposes the cyclical/transitory part of the current account in Turkey, with special reference to its three components, namely foreign demand, domestic demand and foreign trade prices. The estimations under various assumptions indicate that the main trend of the current account deficit hovers around 5 percent of GDP in recent years. Our findings contribute to the understanding of recent dynamics in the current account and associated policies.

Suggested Citation

  • A. Hakan Kara & Cagri Sarikaya, 2013. "Cyclically Adjusted Current Account Balance," CBT Research Notes in Economics 1318, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:econot:1318
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/4a93416f-f225-4bc3-b4a6-06f4f8cc7518/EN1318eng.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-4a93416f-f225-4bc3-b4a6-06f4f8cc7518-m3fw5gO
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    References listed on IDEAS

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    Cited by:

    1. Aşıcı, Ahmet Atıl, 2015. "On the sustainability of the economic growth path of Turkey: 1995–2009," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1731-1741.
    2. João Amador & João Falcão Silva, 2019. "Cyclically-adjusted current account balances in Portugal," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    3. Hakan Kara & Cagri Sarikaya, 2023. "Current Account Balance and External Adjustment in Turkiye," Koç University-TUSIAD Economic Research Forum Working Papers 2306, Koc University-TUSIAD Economic Research Forum.

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