International Conference on Eurasian Economies
29-31 August 2016 – Kaposvár, HUNGARY
Paper detail
Paper ID : 1553
Status : Paper published
Language : Turkish
Topic : Finance and Financial Crises
Presenter: Asst. Prof. Dr. Özge Buzdağlı
Session : 3D Finans III
Elections and The Real Exchange Rate Volatility In Turkey (1992-2014)
Türkiye'de Seçimler ve Reel Döviz Kuru Oynaklığı (1992-2014)
- Prof. Dr. Cevat Gerni (Istanbul Beykent University, Türkiye)
- Asst. Prof. Dr. Özge Buzdağlı (Atatürk University, Türkiye)
- Asst. Prof. Dr. Dilek Özdemir (Atatürk University, Türkiye)
- Prof. Dr. Ömer Selçuk Emsen (Atatürk University, Türkiye)
Abstract
Sudden fluctuations that occur as results of politicians’ manipulation on the macroeconomic variables during the election period are called as Political Business Cycle. In recent years, exchange rate also has become an important subject of many studies in this framework. Before the elections, to gain the public’s votes, politicians firstly put pressure on the exchange rates to prevent currency depreciation, and then this can lead to manipulative fluctuations. In this respect, during the 1992:01-2014:12 periods in Turkey, the impact of the entire local and general elections on the real exchange rate volatility is examined using E-GARCH method. On the other hand, political variables such as independence of Central Bank, exchange rate regime, the number of representatives of the ruling party in the parliament and coalition are included to the model while the pre and after election period from the 1st to the 6th month as dummy variables. Based on the results of the analysis, it can be said that the elections and the political variables affect the real exchange rate and its volatility in Turkey. However, there is no significant evidence whether the politicians act opportunistic behavior to be reelected. Since the uncertainty during the election period cause outflow of the capital and deferral of the investment decisions of the investors until after the election, it may well be said that the politicians fail to influence the real exchange rate for their self-interests.
JEL codes: C58, F31, I28
Gerni, Cevat, Buzdağlı, Özge, Özdemir, Dilek, Emsen, Ömer Selçuk (2016). "Elections and The Real Exchange Rate Volatility In Turkey (1992-2014)" in Proceedings of International Conference of Eurasian Economies 2016, pp.641-651, Kaposvár, HUNGARY.
DOI: https://doi.org/10.36880/C07.01553
