This paper estimates the equilibrium real exchange rate of the Turkish lira to evaluate whether or not the overvaluation results in currency crisis and low growth rate over the period from the first quarter of 1987 to the fourth quarter of 2010. We follow the behavioral equilibrium exchange rate...

This paper investigates the empirical relationship between money, real income, interest rates, inflation and expected exchange rate, and examines the constancy of this relationship, especially in the light of financial reform, deregulation of financial markets and financial crises in Turkey. The...

This article examines four versions of the monetary model for the Turkish lira/U.S. dollar exchange rate. The analysis focuses on two issues. First, we test whether the exchange rate is cointegrated with the long-run determinants predicted by economic theory. The sticky price versions of the...

This paper applies the Johansen cointegration technique to examine the validity of the monetary model of exchange rate determination as an explanation of the Turkish lira-U.S. dollar relationship over 1987:1-2000:12. A single cointegrating vector is identified, lending support to the...

This article examines the validity of purchasing power parity in evaluating whether the Turkish lira was overvalued on the eve of the 2001 crises. Univariate and multivariate time series techniques are used to test whether the real exchange rate is mean reverting. Half-life of deviation from...

The paper estimates both long-run reserves and long-run money demand equations using the multivariate cointegration approach. An economic model is constructed, based on the monetary approach to balance of payments in which the monetary authorities can control money supply through changes in bank...