Is Current Account of Turkey Sustainable ? Evidence from Nonlinear Unit Root Tests

Taştan Serkan and Arıç Kıvanç Halil

Romanian Economic Journal, 2015, vol. 18, issue 57, 95-114

Abstract: In this paper, current account sustainability of Turkey is analyzed in a nonlinear framework. Various nonlinear unit root tests have been used to test for structural break, sign and size nonlinearity. We have tested structural break and size nonlinearity separately and structural break-sign and size-sign nonlinearities simultaneously. Only considering the size nonlinearity, we have found that the current account of Turkey is sustainable. Thus, the size nonlinearity, in other words the speed of reversion to equilibrium, is essential for the current account sustainability of Turkey. We have also found that the speed of adjustment towards equilibrium is symmetric, while considering size and sign nonlinearities simultaneously.

Keywords: current account; sustainability; Unit Root; nonlinearity (search for similar items in EconPapers)
JEL-codes: C22 F32 H62 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:rej:journl:v:18:y:2015:i:57:p:95-114

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