International Conference on Eurasian Economies
1-3 July 2014 – Skopje, MACEDONIA
Paper detail
Paper ID : 983
Status : Paper published
Language : Turkish
Topic : Finance and Financial Crises
Presenter: Ph.D. candidate Gürçem Oransay
Session : 6D Makroekonomi I
Current Account Deficit Sustainability in the Asset Demand Approach
Cari Açığın Sürdürülebilirliğinde Varlık Talebi Yaklaşımı
- Prof. Dr. Mahir Fisunoğlu (Çukurova University, Türkiye)
- Ph.D. candidate Gürçem Oransay (Çukurova University, Türkiye)
Abstract
Despite moderate views about current deficit presence, which started with liberalization in 80’ies, current deficit problem continues to be one of the most debated economical issues in Turkey alike to other developing countries. Sustainability of current deficit has a critical importance in countries’ future decision making processes similar to current deficit itself. This is also important for macroeconomic stability. One of the basic statements for a sustainable current deficit is; current deficit ratio cannot be defined as a critical threshold for all countries as sustainability is related with inter-country dynamics. Due to this reason, the purpose of this study is; identifying current deficit for Turkey by asset demand approach. In this study the presence and direction of relationship between current deficit, asset demand and growth is empirically tested by employing Vector Error Correction Model, has been used to analyze the long term relationship between variables for the period 2001Q4-2012Q2. Before the implementation of model, Dickey-Fuller and Johansen -Cointegration Tests have been applied, which is needed for economical analysis. Initially, a positive relationship between current deficit and asset demand was founded. Since implementation of policies taking the serious consequences of current deficit problem into account is a must, the finds of this study is informative in determining current deficit level that can be sustainable for Turkey and to what extent Turkey is close to the end of its sustainability capacity at the present time.
JEL codes: F34, G15
Fisunoğlu, Mahir, Oransay, Gürçem (2014). "Current Account Deficit Sustainability in the Asset Demand Approach" in Proceedings of International Conference of Eurasian Economies 2014, pp.900-908, Skopje, MACEDONIA.
DOI: https://doi.org/10.36880/C05.00983
