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Effects of Global Economic, Political and Geopolitical Uncertainties on the Turkish Economy: A SVAR Analysis

Ömer Yalçinkaya () and Muhammet Daştan ()
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Ömer Yalçinkaya: Faculty of Economics and Administrative Sciences, Ağrı İbrahim Çecen University Agri, Turkey.
Muhammet Daştan: Faculty of Economics and Administrative Sciences, Ağrı İbrahim Çecen University, Agri, Turkey.

Journal for Economic Forecasting, 2020, issue 1, 97-116

Abstract: This study empirically examines for the first time the simultaneous effects of global economic, political and geopolitical uncertainties (GEPGU) on the Turkish economy over the period from 1992:Q1 to 2018:Q3, in a structural vector autoregressive analysis. The evidence from this study indicates that GEPGU has negative and quantitatively meaningful effects on the main macroeconomic indicators (inflation rate, interest rate, unemployment rate, exchange rate, current account balance and economic growth) of the Turkish economy in the short and/or long run. These findings point towards the fact that GEPGU is a potentially important external factor that may undermine the recovery process of the Turkish economy. Therefore, along with proactive and moderate foreign policies, the Turkish policy makers should expand or redesign the traditional fiscal and monetary policies in order to respond to the external instability elements immediately and to reduce the pre-existing GEPGU to which the economy has to be exposed.

Keywords: economic uncertainty; policy uncertainty; geopolitical uncertainty; Turkish economy; SVAR analysis; Principal Component Analysis (search for similar items in EconPapers)
JEL-codes: C22 D81 E60 O50 (search for similar items in EconPapers)
Date: 2020
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Handle: RePEc:rjr:romjef:v::y:2020:i:1:p:97-116