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Business Cycles, Excess Volatility, and Capital Flows: Evidence from Mexico and Turkey

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  • C. Emre Alper

Abstract

This paper analyzes business cycles in Mexico and Turkey and the results are compared to those for the United States. Excess volatility of real output as well as excess relative volatility of consumption in Mexico and Turkey is uncovered. Fiscal and monetary variables do not yield clear-cut patterns. Both the price levels and the inflation rates turn out to be moving countercyclically, suggesting the appropriateness of a supply-driven business cycle model rather than a demand-driven one for Mexico and Turkey. Capital inflows, especially long-term capital inflows, seem to matter, since they turn out to be strongly procyclical and lead the cycle by one quarter. This observation also emphasizes the relevance of a supply-driven model for the two countries.

Suggested Citation

  • C. Emre Alper, 2002. "Business Cycles, Excess Volatility, and Capital Flows: Evidence from Mexico and Turkey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 38(4), pages 25-58, August.
    • Handle: RePEc:mes:emfitr:v:38:y:2002:i:4:p:25-58
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    Citations

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    Cited by:

    1. C. Emre Alper & Ziya Onis, 2002. "Emerging Market Crises and the IMF: Rethinking the Role of the IMF in the Light of Turkey's 2000-2001 Financial Crises," Working Papers 2002/03, Bogazici University, Department of Economics.
    2. Peter Benczur & Attila Ratfai, 2010. "Economic fluctuations in Central and Eastern Europe: the facts," Applied Economics, Taylor & Francis Journals, vol. 42(25), pages 3279-3292.
    3. Nedzad ISAKOVIC & Erkan ILGUN, 2015. "Cyclical Properties of Workers' Remittances: Evidence from Bosnia and Herzegovina," International Journal of Economics and Financial Issues, Econjournals, vol. 5(1), pages 172-187.
    4. Kar, Saibal, 2008. "Migrant remittances in the state of Kerala, India," MPRA Paper 103805, University Library of Munich, Germany.
    5. Nuri Yildirim & Huseyin Tastan, 2012. "Capital Flows and Economic Growth across Spectral requencies: Evidence from Turkey," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(4), pages 441-462, September.
    6. Scott W. Hegerty, 2014. "Do International Capital Flows Worsen Macroeconomic Volatility in Transition Economies?," Bulletin of Applied Economics, Risk Market Journals, vol. 1(1), pages 1-13.
    7. C. Emre Alper & Orhan Torul, 2008. "Oil Prices, aggregate economic activity and global liquidity conditions: evidence from Turkey," Economics Bulletin, AccessEcon, vol. 17(6), pages 1-8.
    8. Hakan Berument & N. Nergiz Dincer, 2004. "Do Capital Flows Improve Macroeconomic Performance in Emerging Markets? : The Turkish Experience," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 40(4), pages 20-32, July.
    9. Ghate, Chetan & Pandey, Radhika & Patnaik, Ila, 2011. "Has India emerged? Business cycle facts from a transitioning economy," Working Papers 11/88, National Institute of Public Finance and Policy.
    10. Ghate, Chetan & Pandey, Radhika & Patnaik, Ila, 2013. "Has India emerged? Business cycle stylized facts from a transitioning economy," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 157-172.
    11. Torul Orhan & Alper C. Emre, 2010. "Asymmetric Effects of Oil Prices on the Manufacturing Sector in Turkey," Review of Middle East Economics and Finance, De Gruyter, vol. 6(1), pages 90-105, July.
    12. Greg Ekpung Edame & Okoiarikpo Benjamin Okoi, 2015. "Fiscal Deficits and Economic Growth in Nigeria: A Chow Test Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 748-752.
    13. Mr. Serdar Sayan, 2006. "Business Cycles and Workers' Remittances: How Do Migrant Workers Respond to Cyclical Movements of GDP At Home?," IMF Working Papers 2006/052, International Monetary Fund.
    14. Sean J. Gossel & Nicholas Biekpe, 2013. "The Cyclical Relationships Between South Africa's Net Capital Inflows and Fiscal and Monetary Policies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(2), pages 64-83, March.
    15. Sayan, Serdar & Tekin-Koru, Ayca, 2007. "Remittances, Business Cycles and Poverty: The Recent Turkish Experience," MPRA Paper 6029, University Library of Munich, Germany.
    16. Ozgur ASLAN & H. Levent KORAP, 2007. "Monetary Transmission Mechanism In An Open Economy Framework: The Case Of Turkey," Istanbul University Econometrics and Statistics e-Journal, Department of Econometrics, Faculty of Economics, Istanbul University, vol. 5(1), pages 41-66, May.
    17. Li, Suxiao & de Haan, Jakob & Scholtens, Bert, 2018. "Cyclical behavior of international fund flows," Research in International Business and Finance, Elsevier, vol. 43(C), pages 99-112.
    18. Mejía-Reyes, Pablo & Rendón-Rojas, Liliana & Vergara-González, Reyna & Aroca, Patricio, 2018. "International synchronization of the Mexican states business cycles: Explaining factors," The North American Journal of Economics and Finance, Elsevier, vol. 44(C), pages 278-288.
    19. Emel Siklar & Ilyas Siklar, 2021. "Measuring and Analyzing the Common and Idiosyncratic Cycles: An Application for Turkish Manufacturing Industry," Business and Economic Research, Macrothink Institute, vol. 11(2), pages 279-300, June.

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