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Accounting for Turkish Business Cycles


  • Ceyhun ELGİN

    (Boğaziçi Üniversitesi)

  • Deniz ÇİÇEK

    (Minnesota Üniversitesi)


We will conduct Business Cycle Accounting for the Turkish economy to investigate the sources of economic fluctuations within the framework of a standard neoclassical growth model with time-varying wedges across the last four decades. We will then compare the relative importance of different wedges: Labor wedge, efficiency wedge, investment wedge, government spending wedge, and trade wedge. Our main finding is that the efficiency and labor wedges generally account for most of the fluctuations in output, consumption, investment and hours of work. We also looked for different factors which could generate the wedges. Our results generally suggest that frictions affecting productivity and imperfections in the labor market are crucial to understand the evolution of the Turkish business cycles. This implies that any model that tries to understand the causes of the recessions occurred in the last few decades in Turkey should focus on the labor and efficiency wedges.

Suggested Citation

  • Ceyhun ELGİN & Deniz ÇİÇEK, 2011. "Accounting for Turkish Business Cycles," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 26(309), pages 09-32.
  • Handle: RePEc:iif:iifjrn:v:26:y:2011:i:309:p:09-32

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    Cited by:

    1. Üngör, Murat, 2014. "Some thought experiments on the changes in labor supply in Turkey," Economic Modelling, Elsevier, vol. 39(C), pages 265-272.
    2. Brinca, Pedro & Costa-Filho, João & Loria, Francesca, 2020. "Business Cycle Accounting: what have we learned so far?," MPRA Paper 100180, University Library of Munich, Germany.

    More about this item


    Business cycle accounting; Turkish economy; Efficiency wedge; Labor wedge.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence


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