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The Comparison of the Recent Crises in Turkey in terms of Output Gap

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  • Goksel, Turkmen
  • Ozturkler, Harun

Abstract

The importance of output gap and its timely measure come from the fact that it can serve as a guide to macroeconomic policy design. The knowledge of the position of an economy in a cycle is invaluable information and it has an important role in formulation of monetary, fiscal, and income policies. In this paper, we measure potential GDP and output gap for the Turkish Economy for the period between 1998Q1 and 2011Q4, using production function approach. We analyze the crises and the boom periods in terms of output gap. We find that according to the length of downturn and recovery periods, the worst crisis is the 2001. However, when we compare the crises according to the magnitude, the biggest collapse occurs during 2008 crisis. After recovering from 2008 crisis, once again the actual real GDP remains higher than the potential GDP for 5 successive quarters. Moreover, in this period actual real GDP is back on its old trend suggesting that the recovery period is over for Turkey and the negative effects of 2008 global crisis are not permanent.

Suggested Citation

  • Goksel, Turkmen & Ozturkler, Harun, 2012. "The Comparison of the Recent Crises in Turkey in terms of Output Gap," MPRA Paper 40806, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40806
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    References listed on IDEAS

    as
    1. S. Adnan H. A. S. Bukhari & Safdar Ullah Khan, 2008. "Estimating Output Gap for Pakistan Economy: Structural and Statistical Approaches," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 4, pages 31-60.
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    3. A. W. Phillips, 1958. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957," Economica, London School of Economics and Political Science, vol. 25(100), pages 283-299, November.
    4. Jacques R. Artus, 1977. "Measures of Potential Output in Manufacturing for Eight Industrial Countries, 1955-78 (Estimation du potentiel de production relative au secteur manufacturier de huit pays industriels, 1955-78) (Medic," IMF Staff Papers, Palgrave Macmillan, vol. 24(1), pages 1-35, March.
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    More about this item

    Keywords

    Crises; Output gap; Potential GDP; Production function approach; Turkey;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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    This paper has been announced in the following NEP Reports:

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