Is the Turkish current account deficit sustainable?

Arbeitspapier

During the 2011-2015 period, Turkey's current account deficit as a percentage of GDP was one of the largest among the OECD countries. In this paper, we examine if this deficit can be considered sustainable using the Engel and Rogers (2006) approach. In this framework, the current account of a country is determined by the expected discounted present value of its future share of world GDP relative to its current share. A country, whose income is anticipated to rise relative to the rest of the world is expected to borrow now and run a current account de cit. Our findings suggest that Turkey's current account deficit in 2015 may be considered sustainable if the Turkish economy's share in the world economy could continue to grow at rates similar to the past. The same approach, however, indicates that the current account deficit in 2011, at its peak, was unlikely to be sustainable.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1705

Classification and Topics

• Classification: Wirtschaft ; Current Account Adjustment; Short-term Capital Movements ; Open Economy Macroeconomics ; Economic Growth of Open Economies
• Subject: current account ; open economy macroeconomics ; growth

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Abbasoğlu, Osman Furkan ; İmrohoroğlu, Ayşe ; Kabukçuoğlu, Ayşe
• Event: Veröffentlichung
• (who): Koç University-TÜSİAD Economic Research Forum (ERF)
• (where): Istanbul
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/166745
• Last update: 10.03.2025, 11:42 AM CET