Turkey’s macroeconomic policy challenges in the aftermath of the 2018 crisis: A sectoral financial balances analysis
In August 2018, Turkey experienced a major economic crisis when its exchange rate depreciated by around 40 percent in the course of just a few days. This led to a credit bust that soon dragged Turkey into a recession. This paper analysis Turkey’s predicament using the stock-flow consistent sectoral...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
General Association of Economists from Romania
2019-12-01
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| Series: | Theoretical and Applied Economics |
| Subjects: | |
| Online Access: |
http://store.ectap.ro/articole/1424.pdf
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| Summary: | In August 2018, Turkey experienced a major economic crisis when its exchange rate
depreciated by around 40 percent in the course of just a few days. This led to a credit bust that soon
dragged Turkey into a recession. This paper analysis Turkey’s predicament using the stock-flow
consistent sectoral financial balances (SFB) model to delineate and evaluate the policy options open
to Turkey at a juncture where the private sector has commenced a process of deleveraging or in
other words, reducing its net financial accumulation of liabilities. Since the crisis erupted, Turkey
has tightened both monetary and fiscal policies to control accelerating inflation and the
depreciating lira, which would then – it is hoped – revive investment and exports. However,
prevailing uncertainties on account of deteriorating Turkish-US relations may prove a dampener
on the success of these policies. |
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| ISSN: | 1841-8678 1844-0029 |