@article{article_500026, title={Portfolio Balance Approach to Exchange Rate Determination: Testing a Model by Applying Bilateral Data of Turkey and United States1}, journal={Ege Academic Review}, volume={18}, pages={423–434}, year={2018}, author={Tarı, Recep and Gözen, Mehmet Çağrı}, keywords={Exchange Rate Determination Approaches,Portfolio Balance,Risk Premium,Maki Cointegration Test}, abstract={<p>Turkish economy started to be liberated in the </p> <p>beginning of 1980’s and gradually to be a part of </p> <p>global economic and financial system. But as a result </p> <p>of economic articulation of Turkey to the global </p> <p>world, global economic and financial headwinds </p> <p>have affected trade and economy especially via </p> <p>exchange rates. Since Turkey is of ever-growing </p> <p>foreign trade volume with global economic world </p> <p>determination of fluctuations in exchange rates has </p> <p>increased in importance. Due to global integration </p> <p>of financial markets, inflow and outflow of foreign </p> <p>bonds could cause economic agents to change </p> <p>currency composition of foreign assets to reduce </p> <p>the risks arisen from exchange rates. This situation </p> <p>can negatively affect exchange rates by fluctuating </p> <p>them. Aim of this study is to empirically investigate </p> <p>the portfolio balance effect on exchange rates. In </p> <p>this context, different version of Cushman’s model </p> <p>(2007) using monthly bilateral data of Turkey </p> <p>and U.S. covering the period 2006-2016 will be </p> <p>employed and portfolio balance approach to the </p> <p>exchange rates determination will be tested by </p> <p>performing cointegration test allowing for multiple </p> <p>structural breaks. </p>}, number={3}, publisher={Ege Üniversitesi}