Yusuf Soner Baskaya, Julian di Giovanni, Sebnem Kalemli-Ozcan, Mehmet Fatih Ulu, 01 September 2017

Most models assume capital flows are endogenous to the business cycle, and that inflows increase during an economy’s ‘boom’ periods. This column shows that the international no-arbitrage condition in fact does not hold, and that capital flows are pushed into an economy due to high global risk appetite. Controlling for domestic monetary policy responses to capital flows and changes in the exchange rate, exogenous capital inflows lower real borrowing costs and fuel credit expansion.

Beata Javorcik, Alessia Lo Turco, Daniela Maggioni, 29 June 2017

Recent research suggests that foreign direct investment makes it more likely that host countries upgrade production. Using the example of Turkey, this column shows that while the presence of foreign affiliates does not seem to affect the propensity of firms to innovate, it is positively correlated with the complexity level of products newly introduced by local supplier firms. Foreign direct investment inflows appear to act as a catalyst to develop sophisticated manufacturing, and should be promoted as part of a domestic industrial policy.

Kerem Cosar, Banu Demir, 13 June 2017

Container shipping is considered to be one of the drivers of globalisation. This column uses micro-level data to show evidence that confirms the role of 'the box' in the global economy: it implies significant cost savings and explains a significant amount of the global trade increase since its inception. The results also suggest that most of its trade-increasing effect has already been realised.

Manthos Delis, Iftekhar Hasan, Steven Ongena, 22 February 2017

The positive relationship between democratic development and economic outcomes is well established. Using three decades of international data, this column identifies a new channel for this effect – the cost of credit to corporations. It also analyses loan pricing in Turkey to reveal a substantial rise in the average cost of lending after the attempted coup d’etat in July 2016. Together, these results highlight how efficiency in loan pricing results in a comparative advantage for firms in democratic countries over those in less democratic or authoritarian countries.

Banu Demir, Tomasz Michalski, Evren Örs, 20 January 2017

The negative impact of higher capital requirements under Basel II on the provision of trade finance has been cited as one of the factors behind the Great Trade Collapse. This column exploits the adoption of the Basel II framework in Turkey in 2012 to investigate how a shock to the supply of trade-specific finance (in this case, letters of credit) affected firm-level exports. Changes in the cost of letters of credit affected Turkish firms’ reliance on trade finance, but the regulatory shock did not affect firm-level export growth.

Pelin Akyol, James Key, Kala Krishna, 24 August 2016

Guessing answers can undermine the effectiveness of multiple choice exams. Negative marking, in which incorrect answers are penalised, can limit guessing, but may bias the test against risk-averse test takers. Using Turkish university admission exam data, this column explores whether negative marking biases exams, particularly against women, who tend to be more risk averse. Differences in risk aversion appear to have a limited impact, especially for good students. 

Gabriel Felbermayr, Rahel Aichele, Erdal Yalcin, 23 July 2016

New EU trade agreements could adversely affect Turkey as a non-EU member. This column presents new findings of an economic analysis in which different trade policy scenarios are considered. The results point to a clear policy recommendation – Turkey and the EU should mutually deepen their customs union by including the agriculture and service sectors as soon as possible.

Resul Cesur, Pınar Güneş, Erdal Tekin, Aydogan Ulker, 18 January 2016

The goal of universal health coverage has been pursued by countries in a number of ways, most notably through demand-side policies. In 2005, Turkey extended basic healthcare services to its entire population under a free-of-charge, centrally administered system. This column examines the impact of this supply-side programme on mortality and birth rates. Results show that the program was successful in lowering both mortality and birth rates across provinces, particularly for the most vulnerable populations. These findings provide compelling evidence in favour of providing accessible healthcare services to all citizens.

Daron Acemoğlu, Murat Üçer, 18 November 2015

Following an anaemic performance with severe imbalances in the 1990s and a debilitating financial crisis in 2001, Turkey enjoyed a period of rapid economic growth. Since about 2007 onwards, however, economic growth has slowed significantly and productivity growth has stagnated. This column argues that, rather than providing another example of the ‘stop-and-go’ cycles typical of emerging economies, the Turkish economy's ups and downs during this era reflect institutional improvements in the immediate aftermath of its financial crisis, followed by an ominous slide in the quality of these economic and political institutions.

Sebnem Kalemli-Ozcan, 07 January 2014

Financial crises are generally preceded by credit booms and a build-up of external debts. Although it is unclear whether Turkey is experiencing a financial bubble, as of 2013, 58% of the corporate sector’s debt was denominated in foreign currencies. This column argues that this explains the Central Bank of Turkey’s interventions to prop up the value of the Turkish lira. Given the relatively low level of reserves and the unfolding corruption scandal, it is a critical question how long the Bank can continue to do so.

Philipp Böhler, Can Selçuki, Jacques Pelkmans, 01 April 2012

Turkey has been a candidate for EU membership for 15 years. Some have argued that its best chance of gaining entry is to join the European Economic Area first. This column argues that such a move would be bad for Turkey and bad for Europe.

Baybars Karacaovali, 04 September 2011

Turkey has been one of the more active users of antidumping policies since 1989. This column suggests trade policy commitments with the EU may explain the recent rise in such temporary trade barriers. It adds that China has borne the brunt of Turkey’s protection over the 2000s, being involved in 43% of all antidumping cases and 82% of investigations.

Marga Peeters, Loek Groot, 02 August 2011

Fiscal pressure from demographic changes is mounting across the globe. This column asks whether labour markets will create enough jobs. Cross-country comparisons suggest that, until at least 2050, the countries most under pressure will be Poland, Turkey, and Greece.

Helmut Reisen, Jean-Philippe Stijns, 12 July 2011

Many discussions of official development assistance express concerns about China's growing investment and involvement in Africa economies. This column, summarizing the 2011 African Economic Outlook report, emphasizes the benefits of emerging economies' increasing presence in Africa, including the opening of African policy space due to Western donors' decline in relative influence.

Raphael Auer, Andreas Fischer, 05 December 2010

Over the past two decades, Western European trade has become increasingly integrated with emerging economies. This column uses a novel empirical technique to show that import competition from East Asian low-wage countries – in particular China – has dampened inflation in five Western European nations. Increased integration with Turkey and Central and Eastern Europe, meanwhile, has had little effect on inflation.

Thorvaldur Gylfason, Per Wijkman, 24 April 2010

Should Turkey join the EU? This column argues for Turkish membership in order to wed the economic interests of the country with the rest of Europe and reduce the chance of future conflict. To start the process of EU membership, Turkey should be invited to enter the European Economic Area.