The Effect of Real Exchange Rate on Economic Activities in Turkey

• Main Authors: Tuba DİREKÇİ, Ömer ÖZÇİÇEK
• Format: Article
• Language: English
• Published: Gaziantep University 2011-06-01
• Series: Gaziantep University Journal of Social Sciences
• Subjects: Döviz Kuru; Ekonomik Etki; Üretim; Tüketim; Yatırım; Exchange rate; economic effect; production; consumption; investment
• Online Access: http://dergipark.gov.tr/jss/issue/24244/257058?publisher=gantep

The effect of the real exchange rate on economic growth in developing countries is an important discussion subject. According to the orthodox view a devaluation in local currency increases exports which stimulates economic growth. One pillar of the economic programs advised by the World Bank and IMF to developing countries is to devaluate. However, not all economists agree that devaluations have a positive effect. In this study, we investigate how the effects of real exchange rate changes are projected on the Turkish economy by focusing on the GDP and its subcomponents. As a result it is found that a real appreciation increases GDP, private machinery and equipment investment, and inventory, but decreases private building construction, and there is no effect on other components including consumption