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The effectiveness of the post-Covid-19 recovery policies: Evidence from a simulated DSGE model for Turkey

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  • Can, Ufuk
  • Can, Zeynep Gizem
  • Bocuoglu, Mehmet Emin
  • Dogru, Muhammed Erkam

Abstract

This paper aims to explore the effectiveness of macroeconomic recovery policies implemented by fiscal and monetary authorities against Covid-19 pandemic in Turkey. A dynamic stochastic general equilibrium (DSGE) model, in which Turkey is defined as an open and small developing country, is built. The model contains eight groups of agents, which are two heterogeneous households, the firms producing intermediate, final and capital goods, the commercial bank, the central bank and the government. Stochastic simulations of the model reveal the propagation of Covid-19 shock, the impacts of fiscal and monetary tools on the selected economic variables. The simulations demonstrate that direct fiscal measures are more effective in mitigating negative economic impacts of Covid-19. This paper broadens existing literature on the macroeconomic impacts of Covid-19 by exerting the functioning of different fiscal and monetary measures in a comprehensive framework within a developing country context.

Suggested Citation

  • Can, Ufuk & Can, Zeynep Gizem & Bocuoglu, Mehmet Emin & Dogru, Muhammed Erkam, 2021. "The effectiveness of the post-Covid-19 recovery policies: Evidence from a simulated DSGE model for Turkey," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 694-708.
    • Handle: RePEc:eee:ecanpo:v:71:y:2021:i:c:p:694-708
    DOI: 10.1016/j.eap.2021.07.006
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    2. Yugang He, 2022. "Home Production: Does It Matter for the Korean Macroeconomy during the COVID-19 Pandemic?," Mathematics, MDPI, vol. 10(12), pages 1-12, June.
    3. Chanamart Intapan & Chukiat Chaiboonsri & Pairach Piboonrungroj, 2021. "Forecasting for the Optimal Numbers of COVID-19 Infection to Maintain Economic Circular Flows of Thailand," Economies, MDPI, vol. 9(4), pages 1-22, October.
    4. Zhang, Dongyang & Zheng, Wenping, 2022. "Does COVID-19 make the firms’ performance worse? Evidence from the Chinese listed companies," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 560-570.
    5. Shah, Sayar Ahmad & Garg, Bhavesh, 2023. "Testing policy effectiveness during COVID-19: An NK-DSGE analysis," Journal of Asian Economics, Elsevier, vol. 84(C).
    6. Yang, Song, 2022. "Are private equity and venture capital helping small and medium-sized enterprises during the COVID-19 pandemic? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 1-14.
    7. Bhavesh Garg, 2023. "Effectiveness of Monetary and Fiscal Policy in Mitigating Pandemic-Induced Macroeconomic Impacts," Working Papers DP-2023-20, Economic Research Institute for ASEAN and East Asia (ERIA).

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    More about this item

    Keywords

    Covid-19; DSGE; Macroeconomic recovery; Turkey;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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