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The Turkish Economy after the Global Financial Crisis

Author

Listed:
  • Dani Rodrik

    (Harvard Kennedy School)

Abstract

The global financial crisis has demonstrated that a financially open economy has many areas of vulnerability. Even when a country keeps its own house in order, it remains at the mercy of developments in external financial markets. So, one lesson to bear in mind is that policymakers need to guard against not just domestic shocks, but also shocks that emanate outward from financial instability elsewhere. To accomplish this, complete financial openness is not the best policy. A second lesson is that Turkey’s prevailing growth strategy can neither be sustained nor generate enough employment. Therefore, it would be a mistake for the country to return to the status quo ante and resuscitate a model that fails to make adequate use of domestic resources. Most importantly, Turkey has to learn to live with a reduced reliance on external borrowing. The paper discusses the needed realignments in fiscal and exchange-rate policies.

Suggested Citation

  • Dani Rodrik, 2012. "The Turkish Economy after the Global Financial Crisis," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 1(1), pages 41-61, January.
  • Handle: RePEc:tek:journl:v:1:y:2012:i:1:p:41-61
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    References listed on IDEAS

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    1. Hausmann, Ricardo & Klinger, Bailey, 2008. "Growth Diagnostics in Peru," Working Paper Series rwp08-62, Harvard University, John F. Kennedy School of Government.
    2. Prakash Kannan, 2008. "Perspectives on High Real Interest Rates in Turkey," IMF Working Papers 08/251, International Monetary Fund.
    3. Ricardo Hausmann & Bailey Klinger, 2008. "Growth Diagnostics: Perú," Research Department Publications 2005, Inter-American Development Bank, Research Department.
    4. Ercan Uygur, 2010. "The Global Crisis And The Turkish Economy," Working Papers 2010/3, Turkish Economic Association.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Beniamino Moro, 2013. "The Run On Repo and the Liquidity Shortage Problems of the Current Global Financial Crisis: Europe vs. The US," Ekonomi-tek - International Economics Journal, Turkish Economic Association, pages 41-77.
    2. repec:mes:emfitr:v:52:y:2016:i:1:p:123-135 is not listed on IDEAS
    3. Fung, Ka Wai Terence & Demir, Ender & Lau, Chi Keung Marco & Chan, Kwok Ho, 2015. "Reexamining sports-sentiment hypothesis: Microeconomic evidences from Borsa Istanbul," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 34(C), pages 337-355.
    4. Ali, Amjad & Ur Rehman, Hafeez, 2015. "Macroeconomic Instability and Its Impact on Gross Domestic Product: An Empirical Analysis of Pakistan," MPRA Paper 71037, University Library of Munich, Germany.
    5. Savaş ÇEVİK, 2015. "Domestic Saving and Tax Structure: Evidence from Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 23(23).
    6. Ali Ari & Raif Cergibozan, 2016. "The Twin Crises: Determinants of Banking and Currency Crises in the Turkish Economy," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(1), pages 123-135, January.

    More about this item

    Keywords

    Turkish economy; financial crisis; financial open economy; fiscal and exchange rate polcies;

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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