The real exchange rate and economic growth

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Tezin Türü: Doktora

Tezin Yürütüldüğü Kurum: Orta Doğu Teknik Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, İktisat Bölümü, Türkiye

Tezin Onay Tarihi: 2014

Öğrenci: DUYGU YOLCU KARADAM

Danışman: ERDAL ÖZMEN

Özet:

It is controversial in the literature whether depreciation of real exchange rate is expansionary or contractionary for the economy. The main aim of this thesis is to empirically examine the effect of real exchange rate changes on economic growth. Firstly, the growth effects of real exchange rate changes are investigated using a wide panel data set of countries. To this end, we apply not only the conventional panel data estimation procedures but also panel cointegration and the recent procedures taking into account the possible common correlated effects such as global shocks. Secondly, given the importance of sectoral heterogeneity of the impact of real exchange rates on the response of industrial production of Turkish manufacturing industry, the impact of real exchange rate changes on imports, exports, and production of Turkish manufacturing industry sub-sectors is examined taking into account also some sector-specific characteristics. The results showed that depreciation of the real exchange rate is contractionary for developing countries while real exchange rate changes have not any significant effect for developed countries. Additionally, this contractionary effect for developing economies increases with the degree of liability dollarization. Regarding the results of industry-level analysis, output growth of industries is negatively affected from real depreciations whereas this negative effect is larger for high and medium-high technology sectors. Additionally, this negative effect declines as the export share of the sector increases and it rises as its import dependency increases.