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The Comparative Advantage of Contagion Channels of EU Debt Crisis to Turkish Economy

İsmail Çevi̇ş, Reşat Ceylan and Nihal Yayla

Sosyoekonomi Journal, 2018, issue 26(36)

Abstract: In this study, examining the contagion channels of EU debt crisis to Turkey, a financial fragility index is composed for the period of 2004:Q1-2014:Q3 to represent the debt crises. The relationship between this index and capital and finance channel (IIP), foreign trade channel (TTV), expectations channel (CCI and RCI) was analyzed by ARDL (Bound Test) method. Findings illustrates that there is a long run relationship between financial fragility index, real sector confidence index, trade volume and international investment position and that direction of the causality is from financial fragility index to other variables. As a result, EU debt crisis affects Turkey from all three channels, but the expectations channel has a comparative advantage.

Keywords: EU Debt Crisis; Financial Fragility index; Capital and Finance Channel; Foreign Trade Channel; Expectation Channel; ARDL. (search for similar items in EconPapers)
JEL-codes: C13 F41 F62 G01 O57 (search for similar items in EconPapers)
Date: 2018
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