An An evaluation of macro economic policies on exchange rates and the case of Turkey

ABSTRACTMaster ThesisAn Evaluation of Macro Economic Policies on Exchange Rates and The Case ofTurkeysmail MUTLUDokuz Eylül UniversityInstitute of Social SciencesDeparment of EconomicsThe effect of the macro economic policies on the exchange rate is veryimportant because of the fact, that it determines the economical balance in developingcountries such as Turkey. The objective of this study, has been an attempt to find outthe macro economic policies which cause this effect and to determine theirrelationship.This study is essentially concerned with exchange rate regimes and the ways ofexchange rate determination and a general outline has been given of the notion of theexchange rate and macro economic policies in Turkey has been examine; Turkisheconomy that has been effected by financial liberalisation policies, since 1980 hasbeen observed and the economic policies which affect the Exchange rate in theTurkey have been analyzed.In the last part of the thesis an econometric analysis has been made on Turkisheconomy. The process in this analysis is an investigation of the stationary , Engle-Granger double step co-integration and error correction model. As a result of theanalysis in this study; it is determined that nominal currency in Turkey is chieflyeffected by inflation. Besides, it is found out precisely that the effect of export-importratio, interest rate and finally the ratio of budget deficit to GNP the is limited.Key Words : 1) Exchange Rate 2) Macro Economic Policies 3) FinancialLiberalisation 4) Unit Root Tests 5) Co-integration