The case of dollarization in Turkey (1999-2011 an application for the years)

In this thesis, dollarization or currency substitution problem was studied through econometrics method between 1999:01-2011:06 period for Turkey. Dollarization problem can be based on in 1984 in Turkey. To the beginning about the time serials of DTH calculation can be only gone back to 1986. There is no data from this date to the past years. Dollarization problem had been influenced until 2002 by changeable inflation and foreign exchange value and their expectation. Dollarization rates with the inflation began to decrease since 2002 and have been decreased up to now. In this thesis the relations between changeable dollarization rates (DTH/M2Y) with inflation, foreign exchange and changeable adaptive expectation were tried to become definite practically. In the econometrics application the relations between dollarization rates (DTH/M2Y) with inflation, USD Dollar, EURO foreign exchange and adaptive expectations were studied. First, time-serials were tested by Philips Peron Stability Test. The short run relations between the variables were estimated by OLS method. After that Granger Causality Test was put into practice on variables. Long run relations between the variables were studied by using E.Granger, Johansen Cointegration Method and Error Correction Method (ECM). In the short run, according to the application results, the effect in the related period of the all variables on dollarization have been positive but small. In the long run it can be said that the changing of inflation can explain dollarization process is more effective. Adaptive expectations which appear in every estimated model have influenced on dollarization process can be said.Key Words: Dollarization, Currency substitution, Regression, Granger Causality Analysis, Cointegration,