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Exogenous characteristics of short-term capital flows: can they be under control? evidence from Turkey

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  • Levent, Korap
  • Özgür, Aslan

Abstract

In our paper, we give an essay trying to explore whether short-term capital flows can affect and/or be affected by some main domestic macroeconomic indicators called ‘pull’ factors such as real effective exchange rate, trade balance, real income growth process, domestic inflation and real interest structure for the case of Turkish economy. Our estimation results employing some contemporaneous estimation techniques of unrestricted dynamic vector autoregression (VAR) models reveal that short-term capital flows have in fact an important role on the ‘pull’ factors in the sense that inflows appreciate the real effective exchange rate and in turn deteriorate the trade balance, encourage the real income growth, and decrease the real interest rates. But we could not find any significant effects of the ‘pull’ factors on the capital flows.

Suggested Citation

  • Levent, Korap & Özgür, Aslan, 2007. "Exogenous characteristics of short-term capital flows: can they be under control? evidence from Turkey," MPRA Paper 19504, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:19504
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    File URL: https://mpra.ub.uni-muenchen.de/19504/1/MPRA_paper_19504.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Capital Flows ; VAR Modelling ; Turkish Economy ;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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