Structural Change and Macro Econometric Modeling in an Emerging Economy

Turkey has experienced substantial structural change in the last decade. In this paper, with the aid of our developed structural macro model, we attempted to assess the impact of this structural change on future macroeconomic indicators. Some of Turkey’s structural developments such as the joining the WTO and the EU candidacy status as a customs Union member, high capital inflow coupled with the high private borrowings for increasing consumption, highest CA deficit and FDI inflow of the country history. Above all, the studies show that there are considerable productivity increases in all sectors. Simulated model over a rather long future period, also attempted to show the impact of incumbent governments’ recent IP like policies on future CA deficit. Our impact and scenario analysis will help to improve the policies that the government could enact to soften or to profit from these changes. On the whole, we shall evidence a strong impact of structural characteristics in the process. Its role will generally prove a serious impediment to the standard macroeconomic policy results. see above See above