Estimated equilibrium exchange rate for Turkey

Exchange rate has become an important variable in determining competitive situation as soon as the increase in trade relations between countries and the world has transformed into a single market in recent years. After the end of Bretton Woods system at 1973, volatility in exchange rate increased and determination of the equilibrium exchange rate gained in importance. Equilibrium exchange rate is defined, which exchange rate level of concerted with internal and external balance. In this study estimated equilibrium exchange rate for Turkey with ERER approach by considering data from 1998:1-2009:4. The variables which used are, real exchange rate, government consumption, openness, gross domestic product, domectic credit, terms of trade and invesment.