The Impact of Exchange Rates on the Turkish Economy

Willem Thorbecke and Ahmet Sengonul

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: The Turkish lira depreciated by 200% against the U.S. dollar and the euro between 2012 and 2022. We investigate how depreciations affect Turkish imports, exports, and stock prices. We find that depreciations cause large decreases in imports but do not stimulate exports. We also find that they decrease stock prices for most sectors of the Turkish economy. In spite of the weak currency, economic growth in Turkey has remained resilient during the COVID-19 pandemic and the beginning of the Russia-Ukraine war. A stronger lira can strengthen this resilience by increasing the purchasing power of Turkish residents and the profitability of Turkish firms.

Pages: 32 pages
Date: 2022-05
New Economics Papers: this item is included in nep-ara, nep-cis, nep-dem and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:22043

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