 The Exchange Rate: A Shock Absorber or Source of Shocks in Turkey?Ensar Yilmaz International Economic Journal, 2012, vol. 26, issue 1, 175-188 Abstract: This study investigates the role of the exchange rate as shock-absorber as opposed to a source of its own shocks in Turkey during the period from 1990 to 2009 by employing a structural VAR framework with long-run and short-run restrictions. We find that the economic shocks have predominantly been asymmetric relative to one of the largest trading partner, the US. Our results provide evidence of the fact that while the major source of variability in exchange rates in the pre-2001 crisis period is mainly nominal shocks, a large proportion of the exchange rate variability can be attributed to supply and demand shocks in the post-2001 crisis period. This suggets that, rather than reacting to shocks to the foreign exchange market, such as shifts in risk premia, the exchange rate moves mainly in response to the real shocks during the post-2001 crisis period. Hence, there is a sizeable role for exchange rate stabilization during this period, absorbing those shocks and therefore requiring opposed monetary policy responses. Date: 2012 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:intecj:v:26:y:2012:i:1:p:175-188 Ordering information: This journal article can be ordered from DOI: 10.1080/10168737.2012.653224 Access Statistics for this article International Economic Journal is currently edited by Jaymin Lee Editor More articles in International Economic Journal from Taylor & Francis Journals |
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