On the optimality and sustainability of Turkey’s current account

Empirical Economics - Tập 35 - Trang 543-568 - 2008
Ayla Ogus1, Niloufer Sohrabji2
1Department of Economics, Izmir University of Economics, Izmir, Turkey
2Department of Economics, Simmons College, Boston, USA

Tóm tắt

We analyze Turkey’s current account optimality and sustainability between 1992 and 2004. Using the intertemporal benchmark model for Turkey’s current account we test for its intertemporal solvency. Based on traditional and alternative tests (which account for persistence in the current account), we conclude that Turkey breached the intertemporal solvency condition in the sample period. In addition, stationarity tests of the deviation between actual and optimal net external liabilities series confirm that Turkey’s current account deficit was unsustainable for that period. However, further econometric investigation and analysis of reforms causes us to question our conclusions of non-optimality and unsustainability of the Turkish current account for the latter part of the period.

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