Optimal currency areas for Türkiye

Nobel Prize winning economist R. Mundell, in his study published in 1961, defines the area where counties can achieve full employment, balance of payments and price stability targets with the lovest coas as the optimal money area. Increasing international competition as a result of accelerated globalization, especially in the 1980s and after, forced countries to form a number of international unions, or common markets. Thanks to international unions, achieving low-cost mobilty in both the goods market and the factor market is important in terms of ensuring full employment and balance of payment equilibrium. In our study, it's aimed to invertigate the countries that can create an optimal currency area that will contribute positively to the solution of the current account deficit and full employment problems,where both factor mobility and low-cost in the goods market can act fot Turkey. In this study, Impulse-Response function were created in order to examine whether the BSEC member countries could create an optimal currenc area with the Structural Vector Autoregressive model SVAR method using Real GDP and CPI data between the years 1991-2019. In this analysis phase, Armenia and Ukraine were excluded from the analysis because they were not cointegrated and the others ten countries were analyzed within this framework. According to the results of the analysis, the results of Romania, Greece and Bulgaria which are currently members of the European Union are wery floating and the effects, of shocks continue for ten periods. Other countries Albania, Azerbaijan, Georgia, Moldova, Russia, Serbia ans Turkey have low volatility in their responses to shocks and the time fort he effects of shocks to disappear is between 4-6 periods. It was concluded that Turkey, Georgia and Albania formed a core group within the union, that the reactions to shocks were highly similar, and that the time fort he shocks to disappear was ten periods. It has been concluded that the rest of Azerbaijan, Russia, Moldova and Serbia also form a seperate groub, and the duration of the shocks is approximately 6 periods. Within this framework, it was concluded that the creationof a monetary area by the BSEC countries would be beneficial.