IDEAS home Printed from https://ideas.repec.org/p/tcb/econot/1326.html
   My bibliography  Save this paper

An Evaluation of IMF External Balance Assessment Methodology and a Sensitivity Analysis on the Trade Elasticities

Author

Listed:
  • M. Fatih Ekinci
  • Zubeyir Kilinc

Abstract

[EN] The IMF introduced the EBA, as a successor to the CGER, to fulfill its exchange rate evaluation mandate. In this study, we provide a discussion and a set of critiques on the new methodology. Although all of the critiques are very critical to be addressed for a proper examination of the external balance dynamics of the economies, in this particular study, we focus on the translation process of a current account gap into a real exchange rate gap with a specific emphasis on the Turkish economy. The process is particularly important because the methodology implies that the estimated current account gap can solely be closed by exchange rate policies. Therefore, the implementation requires a tightly estimated set of trade elasticities with respect to the real exchange rate. However, the literature reports a wide range of estimates for the trade elasticities of the Turkish exports and imports. We first obtain a current account norm and calculate the current account gaps for Turkey over the recent period according to the External Sustainability approach. A sensitivity analysis on the trade elasticities reveals that the EBA might present a huge dispersion in the estimated real exchange rate gaps. We conclude that the IMF’s assessments on the real exchange rate based on the EBA should be taken very cautiously, especially during the high current account to GDP ratio times. [TR] IMF, kurlari degerlendirme gorevini yerine getirmek uzere CGER metodunun yerine EBA metodolojisini uygulamaya baslamistir. Bu calisma, yeni metodolojiyi tartisip bazi elestiriler siralamaktadir. Ulkelerin dis denge analizlerinin dogru bir sekilde yapilabilmesi icin bu elestirilerin hepsinin cok kritik olmasina ragmen, Turkiye ekonomisine ozel vurgu yapilarak cari dengedeki acigin reel kur acigina donusturulmesi islemi uzerinde durulmaktadir. Bu islem, metodolojinin tahmin edilen cari dengedeki acigin sadece kur politikalari ile kapatilabilecegi ongorusunden dolayi ozel bir oneme sahiptir. Dolayisiyla bu surecte dis ticaretin kur esnekliklerinin cok iyi hesaplanmasi gerekmektedir. Ancak, bu konuda yapilmis calismalar Turkiye’nin ithalat ve ihracatinin kur esneklikleri icin cok genis bir aralik vermektedir. Oncelikle Surdurulebilir Dis Denge yaklasimi kullanilarak Turkiye icin norm cari denge tahmini yapilmakta ve bu tahmin dogrultusunda yakin donem icin cari dengedeki acik hesaplanmaktadir. Yapilan ticaret esnekliklerine duyarlilik analizi ise EBA yontemiyle tahmin edilen reel kur aciklarinda cok genis bir dagilim oldugunu ortaya cikarmaktadir. Bu nedenle, IMF’nin reel kur degerlendirmelerinin, ozellikle yuksek cari acik verilen donemlerde, cok dikkatli yorumlanmasi gerektigi ortaya cikmaktadir.

Suggested Citation

  • M. Fatih Ekinci & Zubeyir Kilinc, 2013. "An Evaluation of IMF External Balance Assessment Methodology and a Sensitivity Analysis on the Trade Elasticities," CBT Research Notes in Economics 1326, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  • Handle: RePEc:tcb:econot:1326
    as

    Download full text from publisher

    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/e38dea79-7c4a-498e-935f-96896f0b37db/EN1326eng.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-e38dea79-7c4a-498e-935f-96896f0b37db-m3fw5gI
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Plamen K Iossifov & Martin Cihak & Amar Shanghavi, 2008. "Interest Rate Elasticity of Residential Housing Prices," IMF Working Papers 2008/247, International Monetary Fund.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tcb:econot:1326. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (). General contact details of provider: https://edirc.repec.org/data/tcmgvtr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.