Exogenous characteristics of short-term capital flows: can they be under control? evidence from Turkey

Levent Korap () and Aslan Özgür

MPRA Paper from University Library of Munich, Germany

Abstract: In our paper, we give an essay trying to explore whether short-term capital flows can affect and/or be affected by some main domestic macroeconomic indicators called ‘pull’ factors such as real effective exchange rate, trade balance, real income growth process, domestic inflation and real interest structure for the case of Turkish economy. Our estimation results employing some contemporaneous estimation techniques of unrestricted dynamic vector autoregression (VAR) models reveal that short-term capital flows have in fact an important role on the ‘pull’ factors in the sense that inflows appreciate the real effective exchange rate and in turn deteriorate the trade balance, encourage the real income growth, and decrease the real interest rates. But we could not find any significant effects of the ‘pull’ factors on the capital flows.

Keywords: Capital Flows; VAR Modelling; Turkish Economy (search for similar items in EconPapers)
JEL-codes: C32 F32 G11 (search for similar items in EconPapers)
Date: 2007
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Published in İstanbul Üniversitesi Sosyal Bilimler Meslek Yüksekokulu Sosyal Bilimler Dergisi 1.2007(2007): pp. 1-16

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19504

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