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Exchange Rate Movements and its Local Effects: Turkey Case

Author

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  • Hasan Engin Duran

    (Izmir Institute of Technology, City and Regional Planning Department, Turkey)

Abstract

Aim of the current study is to investigate the impact of exchange rate movements on regional growth and inequalities across 26 NUTS-2 level regions in Turkey over a period 2004-2011. In terms of methodology, spatial-panel methods such as fixed and random effect estimators alligned with spatial autoregressive and error models were adopted. As an outcome, it has been shown that depreciation of Turkish lira creates an increasing effect on aggregate growth while its impact on regions are quite mixed. The industrialized Western regions are worsely affected. In these regions, depreciations create an increase in the cost items of companies, discouraging the production and output growth. Controversially, relatively less developed regions in Eastern parts are positively affected from depreciations, probably due to their improved export performances, following a depreciation, driven by a decrease in exported-good prices and increased competitiveness in foreign markets. This leads consequently to an improvement of convergence process

Suggested Citation

  • Hasan Engin Duran, 2016. "Exchange Rate Movements and its Local Effects: Turkey Case," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 442-449.
    • Handle: RePEc:eco:journ1:2016-02-11
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    Cited by:

    1. Pasrun Adam & Pasrun Adam & Rosnawintang Rosnawintang & Ambo Wonua Nusantara & Abd Aziz Muthalib, 2017. "A Model of the Dynamic of the Relationship between Exchange Rate and Indonesia's Export," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 255-261.

    More about this item

    Keywords

    Exchange Rate; Regional Growth; Spatial-Panel Models;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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