Analysis of fragility indicators in the economy: The case of Turkey

The aim of this study is to determine the fragility indicators that are suitable for Turkey, among the fragility indicators that have been agreed upon in the literature, and to examine their impact on Turkey's fragility within this framework. Fragility is viewed as an indicator of adverse conditions in the economy or market and the vulnerability of an economy to financial crises. In general, the sensitivity and financial instability of an economy to shocks arising from economic or market changes or market disruptions are expressed by the definition of fragility in the economy. In this study, the CDS (Credit Default Swap) variable, which represents Turkey's fragility, was selected as the dependent variable, and the Current Account Deficit/GDP and Short-Term External Debts/GDP variables, which yielded appropriate results from an econometric perspective, were also determined as independent variables. The period of the data examined in the study is between 2009-2022 and was taken on a quartely basis. The ultimate aim of this study is to reveal the relationships between the mentioned variables through econometric methods and thus measure their effects on Turkey's fragility. Along with the aim of the study, fragility was evaluated within conceptual frameworks in the first and second chapters, and in the third chapter, causality and cointegration relationships of the variables whose stationarity was tested through empirical investigations were analyzed. The correlation coefficient between variables for which short-term causality was not found, long-term relationships were revealed, and the direction of causality was determined was calculated. The relationship between the dependent variable and the independent variables, the current account deficit and short-term external debt, was interpreted and the effect of these variables on fragility was tested. Keywords: Fragile Five, Exchange, İnterest Rate, Inflation, Cointegration Analysis