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Why Does Turkey Have a Chronic Current Account Deficit? An Emprical Analysis

Ali Mohammed Adem () and Bengü Vuran ()

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2018, vol. 8, issue 1, 104-118

Abstract: Turkey faces a significant current account deficit since beginning of the first half of 2000s. The main objective of this study is to investigate the factors which affects the current account balance of Turkey for the period from September 2005 to November 2017. The required monthly data have been collected from Republic of Turkey’s central bank, Turkey statistical instutute, U.S energy information administration websites and investing.com websites. Autoregressive distributed lag(ARDL) approach and Error correction model(ECM) was used for data analysis. The ARDL regression findings show that industrial production index(IPI) statistically and positively affects the current account balance; CDS and the real effective exchange rate statistically and negatively affects the current account balance of Turkey. When investigating the long run impact of these three factors, all of them have a negative and statistcally significant impact on current account. However, in the short run only industrial production index has a negative and statistically significant impact on the account balance.

Keywords: CDS; Current Account Deficit; Industrial Production Index; Real Effective Exchange Rate; Turkey (search for similar items in EconPapers)
Date: 2018
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