CAD Problem in Turkish Economy: An Application with Selected Macroeconomic Variables

Year 2019, , 448 - 461, 30.06.2019

Hacı Ahmet Karadaş , Esengül Salihoğlu , Şerife Merve Koşaroğlu

https://doi.org/10.33905/bseusbed.486105

Cited By: 2

Abstract

Türkiye Ekonomisinde Cari Açık Problemi: Seçili Makroekonomik Değişkenlerle Bir Uygulama

Abstract

The main goal of the countries that want to
increase the prosperity of their citizens is economic growth. As a result of
worldwide economic and prosperity growth, consumption and energy usage
increased significantly. Insufficiency of the local resources lead the
countries to international trade. Growth of international trade and increase of
financial transactions made the current account deficit (CAD) problem very
important for the countries. Therefore, countries develop policies in order to
understand the causes of the CAD and resolve them. Some of the factors that
cause the CAD are excessive appreciation of the country’s currency, fast
economic growth and increase in the imported oil prices. Increase of the CAD as
a share of GDP lead economies to currency and/or financial crises by increasing
their fragility. Thus, CAD preserves its actuality and significance as a
problem for economies. In the last decades, the CAD issue became one of the
chronical problems of Turkish economy. In this context, it is seen that Turkish
economy adopted the growth with CAD strategy in last 20 years and always have
CAD in this period except 1998 and 2001. In this study, the causality relation
and long-term relationship of Turkey's current
account balance (CAB), GDP, brent type oil prices, and real exchange rate are
determined by using data of 2000: Q1-2016: Q2. According to results, there is a bidirectional causality between CAD
and GDP and one-way causality from oil prices to both GDP and CAD. In addition
to causality relation, according the cointegration analysis, oil prices and GDP
increase the CAD in the long run.

Keywords

Current Account Deficit, Current Account Balance, Economic Growth, oil prices

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