An Evaluation of IMF External Balance Assessment Methodology and a Sensitivity Analysis on the Trade Elasticities

[EN] The IMF introduced the EBA, as a successor to the CGER, to fulfill its exchange rate evaluation mandate. In this study, we provide a discussion and a set of critiques on the new methodology. Although all of the critiques are very critical to be addressed for a proper examination of the external balance dynamics of the economies, in this particular study, we focus on the translation process of a current account gap into a real exchange rate gap with a specific emphasis on the Turkish economy. The process is particularly important because the methodology implies that the estimated current account gap can solely be closed by exchange rate policies. Therefore, the implementation requires a tightly estimated set of trade elasticities with respect to the real exchange rate. However, the literature reports a wide range of estimates for the trade elasticities of the Turkish exports and imports. We first obtain a current account norm and calculate the current account gaps for Turkey over the recent period according to the External Sustainability approach. A sensitivity analysis on the trade elasticities reveals that the EBA might present a huge dispersion in the estimated real exchange rate gaps. We conclude that the IMF’s assessments on the real exchange rate based on the EBA should be taken very cautiously, especially during the high current account to GDP ratio times. [TR] IMF, kurlari degerlendirme gorevini yerine getirmek uzere CGER metodunun yerine EBA metodolojisini uygulamaya baslamistir. Bu calisma, yeni metodolojiyi tartisip bazi elestiriler siralamaktadir. Ulkelerin dis denge analizlerinin dogru bir sekilde yapilabilmesi icin bu elestirilerin hepsinin cok kritik olmasina ragmen, Turkiye ekonomisine ozel vurgu yapilarak cari dengedeki acigin reel kur acigina donusturulmesi islemi uzerinde durulmaktadir. Bu islem, metodolojinin tahmin edilen cari dengedeki acigin sadece kur politikalari ile kapatilabilecegi ongorusunden dolayi ozel bir oneme sahiptir. Dolayisiyla bu surecte dis ticaretin kur esnekliklerinin cok iyi hesaplanmasi gerekmektedir. Ancak, bu konuda yapilmis calismalar Turkiye’nin ithalat ve ihracatinin kur esneklikleri icin cok genis bir aralik vermektedir. Oncelikle Surdurulebilir Dis Denge yaklasimi kullanilarak Turkiye icin norm cari denge tahmini yapilmakta ve bu tahmin dogrultusunda yakin donem icin cari dengedeki acik hesaplanmaktadir. Yapilan ticaret esnekliklerine duyarlilik analizi ise EBA yontemiyle tahmin edilen reel kur aciklarinda cok genis bir dagilim oldugunu ortaya cikarmaktadir. Bu nedenle, IMF’nin reel kur degerlendirmelerinin, ozellikle yuksek cari acik verilen donemlerde, cok dikkatli yorumlanmasi gerektigi ortaya cikmaktadir.