Turkish Economy Currency Crisis and Depression; Different Start, Different Result

Document Type : Research Paper

Authors

1 Department of Economics, Institute of Social Sciences, Selcuk University, Konya Turkey

2 Department of Economics, Selcuk University, Konya, Turkey

10.22059/ier.2023.366174.1007820

Abstract

It is generally accepted in the literature that the currency crisis has negative macroeconomic consequences such as bankruptcies, unemployment and recession in economies. It is obvious that the economic consequences of different currency crisis severity will also be different. In order to reveal these differences, in our study, the severe currency crisis that puts the economies into recession is defined as the “Currency Depression”. It is extremely important that cases of currency crisis/depression can be predicted before they arise and allow the economic authorities enough time to implement recovery policies to prevent or at least soften the negative effects of the case. In reference to this importance; Cases of currency crisis/depression occurring in the Turkish economy during 1992:1-2020:12 were created by early warning system signal approach and analyzed in comparison with the 20 set of indicators. The analysis concluded that these two cases had different initial conditions based on the indicators and their efficacy. The macroeconomic consequences of the currency crisis and currency depression are comparable; four-quarter observation period averages respectively, growth, (1.7%, -3.52%) unemployment (employment/employable population: down 2.1 and 2.85 points), inflation (7.37%, 13.38%), interest (43.89%, 63.04%) and real public domestic debt stock change, (11.54%, 20.7%). Thus the judgment was reached that these two cases had different initial conditions and different outcomes.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 04 December 2023

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