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: Statistics., September 15, 2017. 5. COMERT, H., and S. COLAK, “The Impacts of the Global Crisis on the Turkish Economy and Policy Responses.” Economic Research Center Working Papers in Economics, December 2014, Available at:, September 22, 2017. 6. CUSHMAN, D. O. “Real Exchange Rate Risk, Expectations, and the Level of Direct Investment”. The MIT Press 67 (2), 1985: 297-308. 7. DAILY SABAH. Available at:


The aim of the paper is to empirically estimate the growth-maximizing debt-to-GDP ratio in the case of Turkey. To calculate the growth-maximizing debt-to-GDP ratio FMOLS, DOLS, and CCR estimators are used for the period from 1960–2013. According to the empirical findings the growth-maximizing debt-to-GDP ratio varies between 34.3% and 38.7%. Based on a comparison of these ratios to current data (29.1% for 2018), Turkey has the capacity for additional borrowing to achieve a growth-maximizing debt-to-GDP ratio. If this additional borrowing capacity is used for public investment with a return greater than the interest cost of the additional debt economic growth will be maximized and public debt sustainability supported.


This paper aims to capture the favored both national and individual saving and investment perceptions of the Turkish youth. Also, the research contributes to the understanding of the common preferences of the youth and focuses on perceptions over their home country’s saving-investment decisions. We reason, it is important to evaluate views of the youth on national savings and investments as they will be both the decision-makers determining the economic and social policies of the near future and the ones that are directly impacted by these policies implemented today. For this purpose, a questionnaire is applied to randomly selected 550 university students in Turkey and the results are analyzed by the chi-square test. Accordingly, students have mostly preferred that investments should be primarily made to the education sector at national level while investment made for the social security system is placed on the last rank. In addition, education is the most important individual investment choice of participants. On the other hand, information technologies, energy, and agriculture are identified as the most significant investment areas, which could be potentially increased the global competitiveness of their home country. Another important outcome of this research is that students prefer to invest their individual savings in gold and real estate investments, respectively.


The aim of this paper is to examine the dynamic relationship between consumption, investment and unemployment in Turkey using structural VAR (SVAR) models. The four different SVAR models are estimated by using quarterly observations of dynamic and contemporaneous relations for the mentioned macroeconomic variables, covering the 2005-2016 period for the Turkish economy. Four different unemployment rates are used in the study to represent the unemployment rate in the Turkish economy, which are overall, young (15-24 age), male and female unemployment rates. Impulse response functions and variance decomposition results obtained from the study show that consumption shocks have a significant impact on both the unemployment rate and the investments, in support of the basic hypothesis that is argued in the study. Investment shocks also have a similar effect on unemployment rates and positive investment shocks have reduced unemployment rates. Moreover, another result obtained in all four models suggests that a shock in consumption increases investment through the accelerator effect.


In recent years, there has been extensive research on the conduct of monetary policy in small open economies that are subject to inflation and output fluctuations. Policymakers should decide whether to implement strict inflation targeting or to respond to the changes in output fluctuations while conducting monetary policy rule. This study aims to examine the response of alternative monetary policy rules to Turkish economy by means of a DSGE model that is subject to demand and technology shocks. The New Keynesian model we used is borrowed from Gali (2015) and calibrated for the Turkish economy. Welfare effects of alternative Taylor rules are evaluated under different specifications of central bank loss function. One of the main findings of this paper is that in the case of a technology shock, strict inflation targeting rules provide the minimum welfare loss under all loss function configurations. On the contrary, the losses are weakened if the monetary authority responds to output fluctuations in the presence of a demand shock. Finally, there exists a trade-off between the volatility of output and inflation in case of a technology shock, while the volatility of both variables moves in the same direction in response to a demand shock.

The Monetary Transmission Mechanism in the New Economy: Evidence from Turkey (1997-2006)

This study aimed to test the money base, money supply, credit capacity, industrial production index, interest rates, inflation and real exchange rate data of Turkey during the years 1997 - 2006. These were tested through the monetary transmission mechanism and passive money hypothesis, using the vector error correction model-based causality test. Empirical findings showed that the passive money supply hypothesis of the new Keynesian economy is supported in part by accommodationalist views and differs from those of structuralist and liquidity preference theories. However, the monetary transmission mechanism has established that long-term money supply only affects general price levels, while production is influenced by interest rates in the new period of the Turkish economy. Empirical findings show that in this new period, interest transmission mechanisms are at the forefront.


In consideration of channels through which monetary policy affects economic activity, the monetary aggregates have been mostly ignored by the monetary authorities instead of which shortrun interest rates have been given a priori role. These monetary aggregates are largely argued to fail in measuring the effectiveness of different monetary policy regimes in forecasting the macroeconomic fundamentals. Grounded on the “Barnett critique”, the formation of traditional simple-sum monetary aggregates assuming for perfect substitution among the components of the money supply is blamed for such a failure of money in explaining the real activity. Given increasing varieties of financial assets which have completely different “moneyness”, it is important to provide an alternative measure of the money supply. Hereby, the Divisia monetary aggregates which give different weights to different assets have arisen as an alternative approach. In this study, a Divisia index is constructed to test its predictive power on quantities and prices compared to its simple sum counterpart. Accordingly, a Divisia index is built-up for Turkish economy for the period 2006-2016 to see whether the utilization of the Divisia monetary aggregates in the conduct of monetary policy makes any difference compared to that of traditional simple sum money supply. Under different specifications, though the relative power of the Divisia aggregates in predicting quantity and price variables is found, still, it can be argued that theoretically well-rounded formation of the Divisia index is not that much empirically justified for the case of Turkey.


In this study, how the human capital disaggregated by gender and physical capital affects economic growth in Turkey is examined for the period of 1971–2015. By using an arithmetic average of health and education indicators as a proxy of human capital formation, an attempt was made to examine the relationship between the human capital and economic growth under the scope of gender inequality. In this context, an ARDL-bounds testing approach and the unrestricted error-correction model were used to investigate the co-integration in the long- run and short run. Further, the causality test was also conducted to identify the direction of the causality between the variables. The main finding indicates that male human capital has been the central variable affected by both economic growth and physical capital. On one hand, a significant positive relationship was found between the economic growth and physical capital and male human capital in the long-run, while on the other hand, the female human capital was associated negatively to the economic growth. There is no evidence of causality that links the female human capital to other variables. This result suggests that women are not well utilized in the Turkish economy and the country suffers from untapped potential of women.

., & Calvin V., (1997), An analysis of FDI in latin America. Pakistan Economics and Social Review, pp. 11- 24. Ulessever, Talat.A., (2008),The macroeconomic determinants of foreign direct investment in the Turkish economy. Journal of Social and Economic Development, pp.50-67. Wang, Z. Q., Swain.N.J., (1995), The determinants of foreign direct investment in transforming economies: Empirical evidence from Hungary and China. Weltwirtschaftliches Archiv, pp. 359-382. Zaidi, H. H., (2004), Snags in the inflow of FDI. DAWN-business 09 August, 2004. Available at HYPERLINK http

characteristics affect bank performance? Evidence from the Bahrain islamic banks. Journal of Islamic Accounting and Business Research , 9 (2), 251-272. Haşit, G., & Uçar, A. (2014). Sermaye Piyasası Kurulu (SPK) Kurumsal Yönetim İlkelerinden Yönetim Kurulu İlkesinin İncelenmesine Yönelik Nitel Bir Araştırma. Sakarya İktisat Dergisi , 3 (2), 85-113. Inci, A. C. (2018). Financials sector ıntraday volatility characteristics in the emerging Turkish economy. Eurasian Economic Review , 8 , 215-229. Laeven, L. (2013). Corporate governance: What’s special about banks?. Annual