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Effects of Global Economic, Political and Geopolitical Uncertainties on the Turkish Economy: A SVAR Analysis

Author

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  • Ömer YALÇINKAYA

    (Faculty of Economics and Administrative Sciences, Ağrı İbrahim Çecen University Agri, Turkey.)

  • Muhammet DAŞTAN

    (Faculty of Economics and Administrative Sciences, Ağrı İbrahim Çecen University, Agri, Turkey.)

Abstract

This study empirically examines for the first time the simultaneous effects of global economic, political and geopolitical uncertainties (GEPGU) on the Turkish economy over the period from 1992:Q1 to 2018:Q3, in a structural vector autoregressive analysis. The evidence from this study indicates that GEPGU has negative and quantitatively meaningful effects on the main macroeconomic indicators (inflation rate, interest rate, unemployment rate, exchange rate, current account balance and economic growth) of the Turkish economy in the short and/or long run. These findings point towards the fact that GEPGU is a potentially important external factor that may undermine the recovery process of the Turkish economy. Therefore, along with proactive and moderate foreign policies, the Turkish policy makers should expand or redesign the traditional fiscal and monetary policies in order to respond to the external instability elements immediately and to reduce the pre-existing GEPGU to which the economy has to be exposed.

Suggested Citation

  • Ömer YALÇINKAYA & Muhammet DAŞTAN, 2020. "Effects of Global Economic, Political and Geopolitical Uncertainties on the Turkish Economy: A SVAR Analysis," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 97-116, March.
    • Handle: RePEc:rjr:romjef:v::y:2020:i:1:p:97-116
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    More about this item

    Keywords

    economic uncertainty; policy uncertainty; geopolitical uncertainty; Turkish economy; SVAR analysis; Principal Component Analysis;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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