We will characterize the boom-bust cycles in Turkey and connect these to credit markets. There are lots of studies trying to explain the business cycles in developing countries with the help of Total Factor Productivity, incomplete markets, interest rates and borrowing constraints. Each one of these takes some exogenous process and then claims to match the data. Then, one needs to find micro level evidence to support the claim or differentiate between these explanations. We will make extensive use of micro level data sets for Turkey and claim that credit market is an important determinant in boom-bust cycles. Furthermore, this e§ect is asymmetric across sectors generating asymmetric responses during the cycles. Specially, we will show that non-tradable sector is more Financially constrained compared to the tradable sector. This will have implications for real exchange rate and sectoral responses over the business cycles.
More papers in 2009 Meeting Papers from Society for Economic Dynamics Address: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA Contact information at EDIRC. Series data maintained by Christian Zimmermann ().