Exchange rate regimes and currency wars

Currency war is a feared international economic development not only for developed countries but also for developing countries. Because in the modern global world these countries are related through various channels specially through international trade. The aim of this thesis is to study currency wars based on related theoretical framework and to find the effect of currency wars on developing countries. To achieve this objective, the effect of dollar-euro parity on real effective exchange rate and real GDP of Turkish economy after the financial crises has been analyzed. By using VAR models, it is found that, dollar-euro parity affects Turkish economy indirectly through real effective exchange rate. It also affects the real GDP in the long run.