GROWTH EFFECTS OF CURRENCY MISALIGNMENT AND CAPITAL FLIGHT IN TURKEY

Abdullahil Mamun (), Harun Bal (), Shahanara Basher (), Md Mahi Uddin () and Nazamul Hoque ()
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Abdullahil Mamun: International Islamic University Chittagong
Harun Bal: Cukurova University
Shahanara Basher: University of Science and Technology Chittagong
Md Mahi Uddin: International Islamic University Chittagong
Nazamul Hoque: International Islamic University Chittagong

Bulletin of Monetary Economics and Banking, 2023, vol. 26, issue 2, 221-250

Abstract: This study examines the growth effects of Real Exchange Rate (RER) misalignment and capital flight in Turkey during the period 1981-2019. The World Bank’s residual method suggests that capital flight is a widespread problem in Turkey and the Single Equation Approach adopted to delineate the series of RER misalignment identifies that Turkey’s RER is significantly misaligned throughout the sample period. Their growth effects are then examined using the AutoRegressive Distributed Lag (ARDL) bounds approach and we document that RER misalignment degrades per capita output growth while growth faltering capital flight is evident in the presence of policy variables along with currency misalignment.

Keywords: Real exchange rate; Currency misalignment; Undervaluation; Capital flight; Economic growth (search for similar items in EconPapers)
JEL-codes: F21 O16 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:26:y:2023:i:2b:p:221-250

DOI: 10.59091/1410-8046.2069

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