Business Cycle Synchronization of Turkey with Euro Area and the US: What Has Changed After 2001?

Huseyin Cagri Akkoyun, Mahmut Gunay and Bahar Sen-Dogan
Authors registered in the RePEc Author Service: Bahar Sen Dogan

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: In this paper, we make a detailed spectral analysis of the comovement of cycles of Turkish economy with cycles of euro area and the US. Relation between cycles may change with frequency, hence correlation of cycles at short, medium and long run may differ. Also, the correlation in different frequencies may change over time. Structural transformation observed in the Turkish economy after 2001 should also be taken into account in the analysis of business cycle synchronization. So, we use wavelet methodology that enables us to decompose cycles into different frequencies and also the method can deal with non-stationary data with structural change. We find that correlations of Turkish cycles with the cycles of euro area and the US increased after 2001. Moreover, although trade intensity of Turkish economy with euro area is much higher than with the US, in general, correlations of Turkish cycles with the US cycles are not lower than the euro cycles. Therefore, our results suggest that attention should not be limited to direct trade channel when analyzing effect of international developments on the Turkish economy.

Keywords: Business Cycle; Wavelet; Structural Change (search for similar items in EconPapers)
JEL-codes: E32 F40 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-ara and nep-mac
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1215

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